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July 12, 2013


Business owners and tax charges: feds try to build paper trail

Last week we wrote about the many responsibilities that federal and state tax codes place on business owners. From payroll taxes to estimated taxes to the intricacies of the Affordable Care Act, there are a host of ways that tax issues impact businesses and their owners.

Sometimes, of course, business owners find themselves in trouble with authorities concerning the collection or payment of taxes. In Texas and across the nation, these troubles can include IRS audit and, in the most serious cases, criminal tax charges.

In one recent case in another state, a husband and wife who owned a construction business have been accused of failing to pay federal income tax for several years, despite operating a booming business.

The case is from Maine. This week, the wife is on trial on tax and other criminal charges. In addition to tax fraud, prosecutors contend that she also committed workers’ compensation fraud, as well as fraudulent procurement of federal funding for a road repair project.

The trial has involved close scrutiny of the federal tax returns filed by the 55-year-old woman and her husband. An FBI agent took the witness stand and, under questioning by a prosecutor, went line-by-line through the couples’ 1040 forms over a five-year period. The years covered were 2006 to 2010.

The couple had claimed to owe no taxes for 2006 through 2009 because income from their construction business was more than offset by losses in a separate business operated by the wife, as well expenses for operating both businesses.

The trial is expected to run for several weeks. In addition to the tax returns, there are likely to be voluminous financial records introduced as evidence, particularly those relating to bank account transactions.

Source: Kennebec Journal, “Fraud trial testimony shows Marshall Swan had a booming business,” July 10, 201

Tax Crimes