From entertainment to sports, offshore holdings to the corporate board room, forms of tax fraud remain remarkably consistent—only the industry changes. In a recent case prosecuted by the Tax Division of the Department of Justice, a dealer in precious metals faced a jury verdict that could land him in prison for five years.
We often discuss business circumstances that tempt individuals toward tax crime. Tax preparers may step across the line and file fraudulent tax returns, first for themselves, and then others. In Brooklyn, a former resident sold precious metals—and kept a little too much for himself.
Christopher Wolf operated a New York business selling investors on the purchase of precious metals. Precious metals like gold and silver can be a magnet for investors who eschew bonds and investment markets for cold, hard bullion. Some people in a favorable tax situation place wealth in collectible metals like commemorative coins, ingots, wafers, bars, and coins composed of precious metals.
Just some of the precious metals considered valuable collectible assets are silver, platinum, palladium, titanium, and of course, gold. Investors who dabble or dive into the purchase and sale of precious metals can get tripped up by a lack of understanding of the complicated tax rules surrounding these assets.
Yet in this case, it was not the gold or silver that led to a criminal tax investigation. Mr. Wolf, who sold precious metals, concealed the amount of money he made on commissions by creating shell companies into which the commission money flowed. In addition, Mr. Wolf filed fraudulent tax returns that invented deductions and inflated his actual expenses.
We recently discussed consumer behavior that creates the US “tax gap.” Three primary behaviors that create a gap between what consumers actually owe and what the IRS collects include:
- Failing to file
Mr. Wolf underreported his income and underpaid his tax obligation throughout 2010 and 2011. While he did file, he filed false income tax returns. Overall, his behavior contributed to a tax loss (and addition to the tax gap) of $240,000.
After being found guilty, Mr. Wolf faces five years in federal prison for his tax crimes, plus probation, restitution, and other money penalties.
While the industry may change, the methodology of tax evasion usually does not. If it looks and acts like tax fraud—it probably is. If you have reporting or tax concerns for your individual wealth or your company, speak with an experienced tax lawyer before the IRS takes a closer look at your enterprise.
Contact an experienced criminal tax defense attorney in Chicago today
From offices in Cleveland, Ohio, and Chicago, Illinois, we provide local, national, and international legal service to resolve tax issues and skillfully handle tax litigation. If you have an offshore tax holding that you have not disclosed or receive notice of an IRS audit, contact Robert J. Fedor, Esq., LLC for a confidential consultation. Contact us or call 800.579.0997 today.