Tax Horror Stories

I'm Safe After 5 Years for Not Reporting that Cash Under The Table.   
Absolutely Not!


IRS Can Pursue Tax Evasion Even If It is Over 5 Years: Not Reporting Business Income

Tax evasion is a serious crime with severe consequences. A recent case in New York illustrates the IRS's determination to prosecute tax fraud even years after the offenses occurred. In this blog post, we'll delve into this and emphasize that the IRS can pursue tax evasion that happened over five years ago.

The Case Overview:

A New York resident recently pleaded guilty to conspiring to defraud the United States by concealing income from the IRS. This individual, the owner of an auto repair shop, was involved in a multi-year scheme that led to their guilty plea.

Concealing Income Through Check-Cashing:

Between 2013 and 2017, this individual and their associates cashed over $1.3 million in checks payable to their auto shop. Instead of depositing these funds into the legitimate business bank account, they used a check-cashing businesses to avoid financial transparency. The unreported income was used for personal expenditures, including luxury car purchases and extensive home renovations.

Filing False Tax Returns:

A critical aspect of this case is the submission of false tax returns. The individual intentionally hid the check-cashing activity from their tax return preparers. Consequently, this led to tax returns that significantly understated the auto repair shop's income and the individual's personal income. This allowed them to evade paying the appropriate amount of taxes.

Penalties and Consequences:

If convicted, this individual faces significant penalties, including a maximum prison sentence of up to five years, supervised release, restitution to the IRS, and monetary penalties. These penalties highlight the gravity of tax evasion charges.


What Happens in Wisconsin for failing to report all your income?

There was a case where the taxpayer failed to report self-employment from 2016 through 2018 (similar to the case above).  The income not reported saved him a total of $13,000 in taxes over the 3 years.  This was what happened to him after he was convicted and reached an agreement (he still had to pay the $13,000 plus interest and penalties).

Terms of the agreement are:

  •  Not violate any criminal or criminal traffic laws;
  • File monthly reports with the Monroe County Justice Department certifying compliance with the terms of the agreement;
  • Pay a monthly diversion agreement fee;
  • Meet every three months with a diversion program administrator; and
  • Must timely file all applicable Wisconsin tax returns and pay any Wisconsin state tax, interest, penalties, or costs by the due date of a return or notice from the State of Wisconsin, unless certain specified conditions exist.

Failing to comply with the terms of the agreement, he will face sentencing that carries a maximum penalty of up to 12 years in prison and/or $20,000 in fines.