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November 06, 2014

Taxpayer's Criminal Conviction for Assisting in False Tax Return Filings Upheld by U.S. Court of Appeals

The tax attorneys at Nardone Law Group in Columbus, Ohio, are committed to keeping taxpayers updated regarding the Internal Revenue Service’s efforts to eliminate tax fraud, through civil and criminal investigations. In our prior article on IRS Audits and Examinations, we discussed the IRS’ ability to conduct civil investigations of taxpayers’ federal income tax returns and to impose accuracy-related penalties, resulting from any deficiencies. It is important to know that the IRS also has the ability to conduct criminal investigations, which may result in fines, as well as sentences of incarceration. Taxpayers who commit tax crimes, such as filing false returns, making fraudulent claims, or assisting others in similar acts, can face severe punishments if convicted. A recent decision by the U.S. Court of Appeals highlighted the government’s authority to criminally punish fraudulent taxpayers.  

Tax Fraud Results in 97 Month Jail Sentence

In the case of United States v. Bell, the U.S. Court of Appeals for the Ninth Circuit affirmed the conviction of a taxpayer who made false, fictitious, and fraudulent claims to the U.S. Treasury, and assisted in the filing of false tax returns. The case concerned a tax scheme, involving false Form 1099-OIDs, in which a taxpayer would file the form, which falsely stated that an amount of income tax had been withheld. The taxpayer would then rely on that false withholding figure to submit a fraudulent refund claim.

Bell filed five false income tax returns using this scheme. In addition to these false submissions and fraudulent refund claims on his own returns, Bell also promoted the tax scheme to other people, including his son. From October 2008 to October 2009, Bell assisted six taxpayers in filing fifteen tax returns using the Form 1099-OID scheme, collectively requesting $2.7 million in unwarranted refunds, and causing the IRS to mistakenly make refund payments exceeding $670,000.

At trial, Bell proceeded pro se (representing himself) and, according to the court, consistently refused to recognize the authority of the court or to participate in the proceedings.  At the end of trial, the district court delivered jury instructions, the government gave its closing argument, and Bell remained silent, effectively waiving his right to make a closing argument. The jury subsequently convicted Bell as charged. The district court calculated Bell’s sentencing guideline range to be 97 to 121 months, and accordingly sentenced him to 97 months of incarceration, followed by three years of supervised release. Ultimately, the U.S. Court of Appeals affirmed Bell’s conviction.

NLG Comment: This case is a prime example of the severe punishments taxpayers can incur when attempting to defraud the federal government. Not only can the IRS impose hefty civil fines and penalties, but it can also conduct criminal investigations, which can result in lengthy jail sentences. Furthermore, this case illustrates the importance of consulting with an experienced tax attorney to help navigate the intricacies of IRS investigations and any subsequent litigation that might arise.

Contact Nardone Law Group

Nardone Law Group routinely represents businesses and individuals who are undergoing an IRS audit or examination, including criminal investigations. If you have been contacted by an IRS revenue officer, or if you are currently facing a civil or criminal tax investigation, contact one of our experienced tax attorneys today. Nardone Law Group’s tax lawyers and professional staff have vast experience representing taxpayers before the IRS. We will thoroughly review your case and determine what options and alternatives are available.

Contact us today for a consultation to discuss your case.

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November 06, 2014

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