Tax evasion is a serious felony punishable by 5 years in prison. Ditto for filing false tax returns, a 3-year felony. Some restaurant owners under IRS audit are now finding themselves facing criminal charges of harboring undocumented aliens and aiding an abetting document fraud. Those charges can lead to a 10-year prison term.
Many ethnic restaurants hire undocumented workers in the kitchen and as servers. Frequently Mexican and Central American workers gravitate towards these jobs but we have seen similar situations involving Indian and Chinese workers.
IRS revenue agents are being instructed to look for immigration violations when conducting tax audits of restaurants. We suspect that some state auditors are doing the same thing. (State revenue agents are more likely to audit restaurants because of unpaid sales tax.)
In Maine, two brothers were convicted after an 8-day trial of conspiracy to harbor and harboring undocumented aliens and document fraud. One of the men owned a Mexican restaurant in Westbrook, Maine while the other owned Mexican restaurants in Waterville and Biddeford.
Prior to being sentenced a probation officer learned that a juror had expressed an opinion suggesting that those who hire undocumented aliens are all guilty. That comment necessitated a retrial. Both brothers are awaiting a second trial. Even if acquitted on the second go round, their businesses are ruined.
At trial, numerous undocumented aliens from Mexico and Guatemala testified that they were forced to work 12 hour days, six or seven days per week at little or no pay.
These investigations often begin with the IRS but end with criminal charges from the U.S. Immigration and Department of Labor investigators. The IRS has begun to partner with Human Trafficking task forces around the country meaning the stakes are high for restaurants with undocumented workers. Providing living quarters and paying substandard wages really elevates the risk.
What is the take home from this story? If you are a restaurant owner employing illegal immigrants, be very careful. A simple tax audit can turn into a lengthy prison sentence. Historically, these cases have been hard to prove because getting undocumented workers to testify is difficult. U.S. Attorneys, however, are making it easier for workers to remain in the United States and testify against their employers.
If you are under audit or are being investigated criminally by the IRS, seek the services of an experienced criminal tax attorney immediately. If not managed carefully, these cases can become much more serious and extend well beyond the tax realm.
For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries are kept in strict confidence and protected by the attorney-client privilege. Legal services provided nationwide.
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Tagged as: Tax Evasion, IRS Criminal Tax, Immigration Violations, IRS Tax Attorney, Tax Audit Defense