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Businessman admits to tax evasion in federal court

On Behalf of | Nov 22, 2018 | Tax Evasion

A businessman from a state on the other side of Lake Michigan from Chicago entered a plea of guilty to tax evasion in federal court. According to reports, the man faces up to 5 years in federal prison as well as a hefty fine, but it is not clear what, if any, deals he had made with the government in exchange for a guilty plea.

The man has already agreed to pay restitution to the tune of almost $1.25 million, an amount that the IRS claims the man shorted the government. Apparently, the government already has these funds through a 2016 police raid on the man’s home.

This original allegation was that, while the man filed his tax returns, he underreported his income significantly by overstating business expenses. For example, for the tax year 2013, the man claimed that his taxable income was under $35,000, but the IRS ultimately calculated his tax bill for that year at over $280,000.

There are two lessons that Chicago-area individuals can take from this case. First, it almost goes without saying, but the federal government takes allegations of tax evasion seriously, and they will not hesitate to use all means to prosecute people whom they label as cheaters.

The second lesson is that people can face tax evasion allegations for a lot of reasons. It’s not always simply a case of not filing a return or stashing away money. Sometimes, like the case here, padding one’s business expenses to make the enterprise look less profitable than it was can also be considered tax evasion, even when the amount in controversy is much lower.

While sometimes such things really are errors in judgement, in other cases, the government could confuse bad business practices with criminal activity.

A person who is accused of tax evasion, either in criminal court or as part of a civil or administrative proceeding, is well advised to seek the help of an experienced tax attorney.