Taxpayers Sentenced for Tax Evasion, Tax Return Fraud After Restaurant Scheme Unravels
Charles and Lisa Bolton were successful businesspeople who owned and operated two restaurants in the Hattiesburg, Mississippi area. Sports 22 Restaurant and Hall Avenue Package Store were, to all outside appearances, upstanding and profitable businesses. However, prosecutors claimed that the Boltons attempted to pad restaurant profits by engaging in an array of fraudulent behaviors. The Boltons claimed that their actions were merely a mistake caused by reliance on the couple’s accountant.
However, despite the Bolton’s reputation as successful business owners and pillars of their community, they were convicted of various tax offenses by a jury of their peers. Time and time again, individuals who think that their reputation and community standing will protect them against tax allegations find that these factors do not provide the protection they assumed existed. If you are facing allegations of tax fraud stemming from practices at your cash intensive business, it is wise to contact a criminal defense tax lawyer as soon as possible.
How Did the Restaurant Owners Get Into Tax Trouble?
While it may seem to be somewhat of a bromide, taxpayers generally don’t set ordinarily out with the goal to commit tax fraud. Frequently, difficult circumstances or an approach to finances and taxes that becomes progressively more aggressive is behind tax mistakes and errors that trigger an audit or other enforcement action. Here, the taxpayers claim that a simple mistake due to bad advice was replicated multiple times causing it to mushroom into the tax audit and the criminal tax enforcement action.
However, according to the complaint filed against the taxpayers, the defendants willfully attempted to evade their lawful tax filing and payment obligations through three main means. First, the taxpayers cashed thousands of dollars in checks, purportedly issued to pay for liquor and wine, through means intended to conceal the receipt of income. To cover-up this act, the taxpayers then provided the deceptive “cooked” records to their tax preparer that omitted income. Finally, to the extent the taxpayers disclosed these transactions to their accountant, they mischaracterized the income as loans and payments for goods.
What Tax Laws Were the Taxpayers Found Guilty of Violating?
The taxpayers were accused of committing 10 counts of criminal tax offenses. The taxpayers were accused of five counts of tax evasion in violation of Section 7201 of the U.S. Tax Code. Taxpayers who willfully endeavor to avoid or defeat the assessment or payment of tax can be charged with this crime. The taxpayers were accused of committing tax evasion for the 2009 through 2014 tax years. A taxpayer who violates Section 7201 can face a potential prison sentence of up to up to five years per count, 7201 has a six-year statute of limitations, so 6 counts are possible, along with a monetary penalty, restitution, and supervised release.
The taxpayers were also accused of five counts of violating U.S. Tax Code Section 7206(1) – Filing a False Tax Return. The taxpayers were accused of violating this statute for the 2009 through 2014 tax years. Taxpayers who willfully file a false tax return or related documents can, upon conviction, face a prison sentence of up to three years per count, 6 year statute of limitations, and additional monetary penalties.
In September 2016, Charles Bolton was found guilty of four counts of tax evasion for the tax years 2010 through 2013. He was also found guilty of all counts of filing a false tax return. Although it is rare for a maximum penalty to be imposed, Charles Bolton could potentially face a decades-long prison sentence.
Linda Bolton was found guilty on five counts of filing a false tax report for the tax years from 2009- 2013. She was found not guilty on one charge of tax evasion and a mistrial was declared on the other four tax evasion charges due to a deadlocked jury.
Concerned About “Creative” Accounting Practices at Your Business?
If you believe that mistakes were made regarding income taxes, payroll taxes, or any other tax obligation held by your company then it is wise to seek tax guidance as soon as possible. Tax mistakes do not correct themselves with time and continued noncompliance often exacerbates potential criminal tax penalties when the fraud is discovered. If your business is a restaurant, convenience store, a gas station, or another type of business typically dealing in cash then the IRS is even more likely to suspect fraud and launch an audit or tax crime investigation.
The tax lawyers of the Tax Law Offices of David W. Klasing may be able to guide you through an Egg Shell Audit or criminal tax enforcement action. We strive to bring you back into compliance with the law while mitigating the consequences you face. To schedule a confidential and reduced rate consultation at our Los Angeles or Irvine tax law offices, please call 800-681-1295 or contact us online.
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Published at Fri, 24 Mar 2017 16:00:13 +0000