Ah the good life… private airplane, two homes in Palm Springs, a $6 million penthouse in Bellevue, Washington, expensive artwork, country club memberships, thoroughbred horse racing and even a butler. Sounds pretty amazing, but tonight, Seattle developer Thomas Hazelrigg III is a convicted felon and faces 10 years in prison. Last week a federal jury convicted him of 2 counts of tax evasion.
The story surrounding Hazelrigg’s tax evasion conviction is a familiar one. Greed. We know some folks that cut corners on their taxes because they are trying to save their business. The evidence introduced at Hazelrigg’s trial paints a much different picture, however.
According to media reports, Hazelrigg was a successful developer and real estate lender. In 1997 he acknowledged owing the IRS $533,454. Instead of paying the IRS, however, he hid his assets to avoid collections.
Prosecutors claimed that Hazelrigg spent $460,000 on two chandeliers. Obviously that money could have gone to virtually wipe out his tax debt.
Tax evasion usually occurs when a taxpayer hides income from the IRS. Hiding assets, however is a different form of tax evasion. The law recognizes both evasion of assessment and evasion of payment.
The government claims Hazelrigg’s actions were so blatant that he even bragged in an email sent to his accountant when the collections statute of limitations had run. The Internal Revenue Code gives the IRS a certain period of years to collect delinquent tax debts. He thought he made it without paying the IRS; instead the IRS dusted off the criminal tax evasion statute and indicted him.
In announcing his conviction, the acting United States Attorney for Seattle, Annette Hayes, said, “This trial laid bare Mr. Hazelrigg’s wide ranging deceit and manipulation — all in the service of greed. The failure to pay taxes — especially by someone with this defendant’s financial means — tears at the fabric of our public trust. When Mr. Hazelrigg chose not to pay his fair share, he effectively cheated everyone.”
Those sentiments were echoed by the IRS which said in a prepared statement: “What makes this case so egregious is that he consented that he owed the tax and then immediately took exceptional actions to avoid his obligation to pay, all while living a lavish lifestyle. This verdict today sends a strong message that tax evasion will not and cannot be tolerated. Americans who pay their fair share can be confident that IRS Criminal Investigation will pursue those who do not.”
The typical tax evasion case starts out innocently enough. A taxpayer skips a year and makes a promise to himself to “make it up” next year when times get better. Unfortunately one year becomes two and then more. Hazelrigg, however, had the money to pay. That means he is likely to have a tough time at sentencing.
The lesson here? If you owe the IRS money or are missing returns, seek help from a qualified tax lawyer immediately. Ignoring the problem rarely ever works. It is much easier to keep a collection or audit case from becoming a criminal investigation then it is to stop an ongoing investigation once begun.
The IRS tax lawyers at Mahany & Ertl offer a complete range of tax services including collections, criminal tax (tax evasion, false returns), audit defense and offshore tax reporting. Need more information? Contact attorney Brian Mahany at or by telephone at (414) 704-6731 (criminal tax) or attorney Bethany Canfield at or (414) 223-0464 (civil tax matters). All inquiries protected by the attorney – client privilege and kept in confidence.