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Sentence handed down in California tax evasion case

There are many reasons why people do not file their taxes. Sometimes they simply to overwhelmed by events in their lives and not really intend to evade taxes.

But as a recent California case showed, failing to file federal tax returns can not only lead to trouble with the IRS. It can also lead to tax evasion charges by federal prosecutors.

Last month, a U.S. district judge sentenced a San Diego auto dealer to 15 months in prison for evasion of individual income taxes. According to court documents, the auto dealer underreported the income he earned from the dealerships. The judge found that the underreporting resulted in a tax loss of over $200,000.

In addition to the 15-month prison sentence, the judge ordered the auto dealer to make restitution payments to the IRS. The restitution amount was set at $124,454.

The auto dealer had pleaded guilty last year to tax evasion. He admitted to willfully failing to file his personal income tax return for 2007 and not paying taxes to the IRS. He also admitted to engaging in acts intended to conceal income, such as using another auto dealer's license and having checks made out to "cash" or to a third party.

The case was prosecuted by the Tax Division of the Justice Department. Special agents from the IRS - Criminal Division were involved, as well as Tax Division trial attorneys.

A case like this is a reminder that business owners need to be careful in how they handle their business accounts. If there are irregularities in those accounts, it may lead to consequences not only for the business, but also on the owner's individual tax returns.

Source: "San Diego Man Sentenced for Failure to File Personal Tax Returns," LoanSafe.org, Evan Bedard, 11-19-12

Our firm handles situations similar to those discussed in this post. To learn more about our practice, please visit our page on failure to file tax returns.

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