Tax evasion is a crime under both federal law and the law of most states. Although the tax laws vary from state to state, all 50 states criminalize willful failures to file or pay taxes and knowingly filing false tax returns. Although it doesn’t happen often, it is possible to be prosecuted simultaneously by a state revenue department and the IRS. Just ask Hank and Marsha Holloway of Chesterhill, Ohio.
Ohio authorities prosecuted Hank Holloway last year and convicted him of 5 counts of state income tax fraud and 1 count of corrupt activities. Prosecutors say the couple was running drugs from Arizona to Ohio. Over 3 years (2006 through 2008) the couple reportedly claimed they had just $42,000 in income. That’s just $7000 per year for each of them; well below federal poverty guidelines. Despite their meager earnings as reported on tax returns, the Holloways managed to acquire 10 cars, 2 jet skis, a camper and dozens of luxury items. They also had almost $1 million in cash according to press reports. (As I write this post on Black Friday, even the best “door buster” sales don’t offer bargains these great.)
Hank Holloway was sentenced to 5 years in prison last year by a judge in the Morgan County Court of Common Pleas. His troubles didn’t end there, however. Earlier this year, the IRS decided to indict him as well. Hank was charged and convicted of filing a false tax return, a felony punishable by 3 years in prison. Last week he was sentenced to 2 years in prison. His sentence was ordered to run consecutive meaning that he must finish his Ohio sentence before he begins the federal sentence.
If you are facing criminal tax charges, make sure to hire an experienced criminal tax attorney. Unless you already have negotiated a universal agreement, pleading guilty to a federal charge may set you up for similar state charges or vice versa. Many otherwise good criminal lawyers often forget that tax crimes are one of the few areas where both the state and federal government can simultaneously prosecute for what is the essentially the same offense.
If you have unpaid or unreported business taxes or believe you are the target of a criminal investigation, contact us immediately. Our IRS tax attorneys have helped people across the United States come into compliance and avoid jail.
Mahany & Ertl is a full service, national boutique practice concentrating in tax evasion investigations, IRS audit defense and trust fund recovery penalty assessments. Founding partner Brian Mahany is a former agent and Assistant Attorney General – Tax. Our team has decades of IRS criminal tax experience to help preserve your freedom.
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Post by Brian Mahany