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April 9, 2020


Does conduct matter when charged with a tax crime?

Tax crimes may seem like a game of numbers. It may seem the Internal Revenue Service (IRS) will build their case based on whether or not the accused filed their tax returns, whether or not the listed income or deductions were in line with the reality of the accused’s financial situation.

To move forward with a case under the assumption that the IRS will only look at the numbers can lead to a big surprise.

Tax crimes are more than just a numbers game

In a recent case, a judge provided a sentence that was significantly higher than expected. Although within the legal limits, sentences for the type of tax crime at issue are often at the low end or even below the guidelines. However, in this case the judge chose to provide a sentence that was in the mid to high range of the legal limit.

Why? Although no one knows exactly what led the judge presiding over the case to lean on the high side, it is likely the accused’s conduct played a role.

Lies, continued criminal conduct and other bad behavior can play a role in sentencing

In this case, the accused allegedly lied to his accountant filed extension requests with the IRS with false information, missed deadlines, bounced checks, and fraudulently claimed financial distress. At the same time, the accused was living a lavish lifestyle that included luxury vehicles and a multi-million-dollar mansion in Connecticut.

The IRS built a case against the accused and moved forward, charging the man with a number of crimes including filing false returns, tax evasion, and obstructing the IRS. When the accused failed to go to trial, the government required he plead guilty to all charges. In this case, the judge had two options. He could allow the sentences to run concurrently or he could stack them. He chose to stack the sentences. Upon receiving a 90-month sentence, the accused attempted to withdraw his guilty plea. He stated he was unaware the sentences could run concurrently. His request was rejected.

This case provides an example of the need to take allegations of tax crimes seriously. A failure to do so under the assumption the accused would, at worst, be slapped with a financial penalty is ill-advised.

Tax Crimes