While serving as Maine’s revenue commissioner, I read a study that showed most people were more afraid of the IRS then state revenue departments. That means if a taxpayer owed $1000 to the feds and $1000 to the state but only had $500 available then chances were the IRS would get the money. As today’s shows, don’t ignore the state tax man. State revenue departments and judges aren’t afraid to pull the trigger either!
According to a story from KETV Omaha, 54-year-old Caroline Richardson of Gretna, Nebraska was convicted of three counts of felony tax evasion. Prosecutors say that she embezzled $4 million from Colombo Candy and Tobacco Wholesale Company, a business where she worked. While stealing that much money could put anyone in prison, her employer chose not to prosecute. (Published reports don’t say why but we suspect her employer accepted prompt payment of restitution in return for no prosecution.)
Although she may have made peace with her former employer, the Nebraska Department of Revenue was evidently not happy that she didn’t pay tax on that money. Yes, even illegal source income is taxable. That means drug dealers and thieves required to pay their fair share of taxes too.
Richardson’s attorney, James Schaefer, sought probation. “I was cautiously optimistic that Ms. Richardson would receive a probationary sentence because this essentially is a tax case”, he said. Tax case? Yes but that adds up to approximately $400,000 in back taxes.
Richardson didn’t receive probation. Instead she was sentenced to 5 years in prison. Under Nebraska law, she will be eligible for parole when half her sentence is served.
The lesson here? Don’t underestimate the ability of state revenue departments and judges to take action in tax evasion cases. If you owe both the IRS and the state, find a good tax attorney well versed in collection procedures. Paying one while putting off the other is generally not a good idea.
Also remember that illegal source income is taxable. While not too many drug dealers report the earnings on their drug deals, many criminals are caught when they fill out a loan or credit card application showing they make millions yet their tax returns show something much different.
If you receive a tax audit notice or are under criminal investigation for unpaid or unreported taxes, seek an experienced criminal tax lawyer immediately.
Ignoring collection notices too is another recipe for disaster. Tax evasion charges can also be brought for evasion of payment! Again, find a good tax attorney as soon as possible.
The IRS attorneys at Mahany & Ertl have helped people across the United States avoid prosecution and enforced collections. For more information about collections and audits, contact attorney Bethany Canfield at or by telephone at (414) 223-0464. Already under criminal investigation? 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 in most jurisdictions.
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