From the Tax Law Offices of David W. Klasing - Connecticut Man Pleads Guilty to Tax Evasion on Fishing Income

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Tax Law Offices of David W. Klasing, PC

Aug 27, 2024, 06:37 ET

IRVINE, Calif., Aug. 27, 2024 /PRNewswire/ -- According to a Department of Justice press release, a Connecticut man recently pleaded guilty to tax evasion on income that he earned engaging in a fishing operation. This story details the potential consequences that a taxpayer can face if they intentionally violate federal income tax laws. If you have failed to file a tax return for one or more years, or have filed a tax return that is false, you should contact an experienced tax attorney to determine the best way for you to come into compliance and avoid some of the negative repercussions that the defendant in the below case will surely face.

Why you should use an Attorney to represent you in an audit

Defendant Earned Significant Fishing Income, Failed to Income it On His Tax Return

Court records reveal that Brian Kobus of Durham, Connecticut, pleaded guilty to evading taxes on $1.4 million earned as a commercial fisherman from 2011 to 2013 and 2017 to 2021. Kobus did not file federal income tax returns or pay the taxes that he owed, instead cashing his paychecks and using the cash to fund his lifestyle. The illegal activity resulted in a tax loss of over $375,000.

Kobus faces a maximum penalty of five years in prison on the tax evasion charge and will be sentenced later this year. Additionally, Kobus could be ordered to serve a period of supervised release that would commence upon the completion of any physical incarceration. Finally, he could be ordered to pay restitution to the government, representing the amount of tax loss that he caused.

Understanding the Severe Penalties for Tax Evasion

This case highlights the severe consequences of tax evasion. Kobus's activity resulted in legal proceedings and will very likely result in time spent in a federal prison. The penalties emphasize the importance of compliance with federal and state tax laws and the serious consequences of attempting to evade them.

This case entails exposure that can ramp up simple misdemeanor non filing to felony tax evasion. The "Spies evasion" doctrine is, essentially, one of the ways of committing tax evasion. It is a legal theory that finds a taxpayer criminally liable when he willfully (1) fails to file a tax return, and (2) his action is coupled with an "affirmative act of evasion," like actively concealing or misleading the government. In Spies the Supreme Court identified at least seven examples of conduct that constituted affirmative acts of evasion. The Court stated: [We] "think [the] affirmative willful attempt may be inferred from conduct such as [1] keeping a double set of books, [2] making false entries of alterations, [3] or false invoices or documents, [4] destruction of books or records, [5] concealment of assets or covering up sources of income, [6] handling of one's affairs to avoid making the records usual in transactions of the kind, and [7] any conduct, the likely effect of which would be to mislead or to conceal." Spies v. United States , 317 U.S. 492, 499 (1943).

What is an "affirmative act" for purposes of the Spies evasion doctrine? It may be any number of things, including but not limited to, making a false statement to the IRS, either oral or written. Importantly, the statement could be made before, after, or at the same time as filing the tax return. Thus, for example, a taxpayer makes an "affirmative" act of evasion after failing to file his income tax return when he lies to the IRS about how much income he earned. Accordingly, a taxpayer's lying about earnings could also earn him jail time-and heavy penalties.

If you have fallen out of tax compliance, it is crucial to seek assistance from an experienced attorney. A knowledgeable tax lawyer can help navigate the complexities of the tax law system, develop a strategy to address outstanding issues, and work towards getting right with the government.

Getting Back Into Compliance Without Facing Criminal Tax Prosecution Where You Have a Long History of Blatantly Cheating / Non Filing

If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.

Note:

As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.

It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.

Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.

As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!

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