Criminal Tax Defense

Signs That You Are Under Criminal Tax Investigation.

Usually individuals and businesses do not know that they are being targeted by the IRS until late in the process. The IRS may have been investigating you for years and you usually end up finding out about this when one of these things happen:

• You receive a letter from the IRS stating you are the subject of a criminal tax investigation.
• An IRS special agent contacts you for an interview.
• Your brokerage firm or other financial institution is contacted by the IRS, the Department of Justice Tax Division or the U.S. Attorney’s office.
• Your accountant or someone you know is subpoenaed to appear before a federal grand jury and give testimony.
• You receive notification of a tax audit by the IRS.
• The IRS raids your home or office and questions your family or business colleagues about you.

If an IRS Special Agent contacts you, you will be advised that you are not required to speak with the Special Agent and that you may have an attorney present. Take this advice. Politely ask the agent to leave and state that you wish to consult an attorney. Likewise, if you are currently under criminal investigation and have been cooperating and talking with a Special Agent, stop cooperating immediately and consult with one of our tax attorneys in California.

If your accountant is subpoenaed to appear before the Grand Jury and bring your records, a Federal Grand Jury is being utilized to conduct a criminal investigation of you and/or your company. The Grand Jury is gathering evidence at the request or referral of the IRS or another government agency. Since conversations with your accountant are not protected under “attorney-client privilege,” you should refrain from further discussion with your accountant until you have engaged legal counsel for help with your IRS tax problems.

If you receive a notice from the IRS that one or more of your previous tax years are being audited AND you know that the returns contain either understatements of income or overstatements of deductions, or both, you should refrain from further discussion with your accountant until you have engaged legal counsel. Although this is initially only a civil audit, Revenue Agents are trained to be on the lookout for and refer fraud red flags to the Criminal Investigation Division. Existing “accountant-client privilege” does not extend to criminal investigations, meaning that your accountant may be forced to provide details to the Internal Revenue Service about your situation.

Penalties For Filing A False Income Tax Return Or Under-reporting Income.

Failure to report all the money you make is a main reason folks end up facing an IRS auditor. Carelessness on your tax return might get you whacked with a 20% penalty. But that’s nothing compared to the 75% civil penalty for willful tax fraud and possibly facing criminal charges of tax evasion that if convicted could land you in jail.

Criminal Fraud – The law defines that any person who willfully attempts in any manner to evade or defeat any tax under the Internal Revenue Code or the payment thereof is, in addition to other penalties provided by law, guilty of a felony and, upon conviction thereof, can be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than five years, or both, together with the costs of prosecution (Code Sec. 7201).

The term “willfully” has been interpreted to require a specific intent to violate the law (U.S. v. Pomponio, 429 U.S. 10 (1976)). The term “willfulness” is defined as the voluntary, intentional violation of a known legal duty (Cheek v. U.S., 498 U.S. 192 (1991)).

And even if the IRS is not looking to put you in jail, they will be looking to hit you with a big tax bill with hefty penalties.

Civil Fraud – Normally the IRS will impose a negligence penalty of 20% of the underpayment of tax (Code Sec. 6662(b)(1) and 6662(b)(2)) but violations of the Internal Revenue Code with the intent to evade income taxes may result in a civil fraud penalty. In lieu of the 20% negligence penalty, the civil fraud penalty is 75% of the underpayment of tax (Code Sec. 6663). The imposition of the Civil Fraud Penalty essentially doubles your liability to the IRS!

Although a criminal charge is only an accusation of a crime and a defendant is presumed innocent unless and until proven guilty, given the illegal status of cannabis under Federal law you need to protect yourself and your marijuana business from all challenges created by the U.S. government. While cannabis is legal in California, that is not enough to protect you. It’s coming down that the biggest risk is TAXES.

Having access to a Board Certified Tax Attorney-CPA with specialized knowledge in the cannabis industry and more than 30 years of experience in advising businesses in tax compliance and planning, accounting systems and cash management can help you meet your challenges to minimize your taxes and conduct business in a manner that avoids prosecution by the Federal authorities and meets State & Local laws and regulations to ensure your cannabis business remains operational. Don’t delay call us today!