J. Patrick Quillian, P.C.

J. Patrick Quillian Attorney At Law

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Tax Evasion: Am I Guilty?

Earlier this month a Warr Acres man pleaded guilty in federal court to tax evasion after admitting to concealing income and establishing a shell corporation to avoid reporting payments from contractors on his tax return. Ricky A. Erwin agreed to pay $133,015 in restitution to the IRS for taxes owed in from 2007 through 2010. He faces a maximum of 5 years in prison and a $250,000 fine at sentencing.

A press release from the U.S. Attorney’s Office for the Western District of Oklahoma describes the man’s admission in court:

“. . . Erwin admitted that he made several affirmative acts to conceal his income, to include enlisting a third party to incorporate a business in 2007 named Pro Tech Supply Inc. (PTSI), and instructing the third party to serve as PTSI’s registered agent to separate himself from the entity. Erwin further admitted to using PTSI as a shell corporation for his construction business and instructing contractors to make payments to PTSI to avoid them having to report his income to the IRS on Form 1099s.”

With the federal income tax filing deadline just around the corner, it is important to understand what “tax evasion” and “tax fraud” mean. Filing a tax return can be difficult and stressful, and the IRS acknowledges that a large percentage of income tax returns contain some error. Sometimes, those errors are considered negligence; other times, false information in tax returns is considered criminal. Negligence is usually punished by financial penalties including fines and interest. However, tax fraud is punished by prison and fines in addition to the civil IRS penalties.

How does the IRS know the difference between negligence and fraud? Typically, negligence is a misunderstanding of tax laws or a simple error in calculation. Tax fraud and tax evasion, however, are based on intent–in other words, the defendant purposefully conceals or misrepresents material information.

Tax fraud and tax evasion are defined in 26 U.S. Code § 7201 – Attempt to evade or defeat tax:

“Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.”

If you are accused of tax fraud or any federal white collar crime, it is critical to contact a federal criminal defense lawyer as quickly as possible to preserve your rights and to build a strong defense. Call today to learn more.

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