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July 19, 2013


Tax fraud and family-run businesses: a North Texas case

The relationship between a father and a son is undeniably a crucial one. After all, for many boys, their father is their first role model. For the lucky ones, he is their first hero.

To be sure, many boys grow up without a father. Others have abusive fathers. Yet even when a father is absent or abusive, the relationship is still a formative one for the child.

Sometimes, such as in family businesses, fathers and sons work closely together even when the sons become adults. And in one recent Dallas – Fort Worth area case, both father and son have been convicted of tax evasion charges.

This week a federal judge sentenced a businessman and his son from North Texas to prison terms for tax evasion. The father got 14 years and the son 13 months.

Prosecutors contended that the father concealed business assets in order to evade federal taxes. His son, who had helped his father operate several businesses, apparently went along with the deception and pleaded guilty to making false statements.

The tax years at issue in the son’s case were from 2006 to 2008. The businesses were in the field of finance, but also included a drug store.

Both father and son must pay fines in addition to serving prison time. And for the father, there are back taxes, interest and tax penalties to pay. These taxes and penalties are considerable, totaling about $25 million when the $550,000 fine amount is added in.

It remains to be seen, of course, what effect this experience will have on the father-son relationship. But a case like this does show the peculiar problems that family-run businesses can encounter.

Source: WFAA, “Father, son get prison in North Texas tax fraud,” July 18, 2013

Tax Evasion