Robert J. Fedor, Esq., L.L.C.

Business owner charged with tax evasion after using company card

In previous blog posts, we've discussed some of the tax faux pas small business owners may make. Small business owners are the backbone of the American economy and the men and women who work hard to start, grow and sustain a business are often juggling many priorities and the lines between what's business and what's personal may be blurred or crossed.

A 49-year-old co-owner and president of a small cabinet making company recently pleaded guilty to one criminal count of tax evasion. The guilty plea was part of a plea deal in which prosecutors agreed to drop additional criminal charges. According to court documents, the small business owner made personal purchases using a company credit card which he then failed to declare as income.

In total, federal officials assert the man purchased personal items totaling more than $280,000 using a company credit card. He then failed, however, to declare the expenditures as personal income on his taxes and therefore evaded paying some $50,000 to the IRS for the tax years 2007 and 2008.

The man has yet to be sentenced, but could face up to five years in prison. He is hopeful, however, that the judge will opt for probation which would allow him to continue to operate his business which employs 16 carpenters and cabinet installers.

This case is an example of how small business owners can get into tax trouble when mixing business and personal expenditures. In some cases, small business owners may unintentionally and unknowingly commit tax crimes. An individual or business owner who is facing criminal charges related to tax crimes such as tax evasion or tax fraud would be wise to retain an attorney. 

Source: NorthJersey.com, "Allendale carpenter pleads guilty to federal income tax evasion," Peter J. Sampson, Jan. 14, 2014 

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