Tax Evasion Case

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    I was hired to help a criminal defense attorney build a defense for a client who was charged with 4 counts tax evasion and 12 counts of failure to file/pay. This is a state case rather than Federal.

    Case appears to be a cash deposits case. Maine Revenue met with the client and accused him/her of underreporting income on returns prepared on turbotax (hmmm, maybe I should look into the turbotax defense). Right now that’s all we have from the client, we are awaiting discovery from the state.

    Any thoughts or helpful insights are certainly welcome and appreciated. So now maybe a good time to ask for some education on assisting with criminal tax matters.

    Jim Wade

    Robert Loh


    What type of business was the client running/working in? In some cases, you can use analytical indicators to understand the maximum revenue/income potential and see how that compares to the other information you have.


    Eric Green

    James, get the bank statements and the client has to explain what deposits were not income, if any. If they cant is it possible they missed expenses? You start by literally reconstructing the income and expenses. Unless of course the client admits they were under-reporting. I assume the client is denying it.

    The goal is to either prove the client can explain any unreported income as (1) not income or (2) not taxable because of additional expenses. If they cant, and you have unreported income, then step 2 is can you come up with additional expenses or other items to reduce and limit the damage.

    Get a good retainer up front…

    James Wade

    Eric and Rob,

    Thank you for the helpful information. Right now I am waiting on the “voluminous” discover from the state (per the criminal defense attorney). Has the earmarks of an interesting case.

    Eric, from my meeting with the defense attorney and client, client denies any underreporting. Intermingled funds between biz and personal accounts from her Sch C so maybe a defense there. Otherwise I will be talking with counsel about proper expense reported to reduce tax loss.

    I listened to your CPE from CCH CPELink and Robert McKenzie’s through ASTPS. Both were very helpful in giving me some hints on how this needs to be attacked.

    We will see.


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