A Woburn man and his female co-conspirator were indicted in Boston’s federal court Wednesday with fraud and conspiracy charges. The allegations were presented after the two were investigated by the Internal Revenue Service’s Criminal Investigation Unit and the U.S. Attorney’s Economic Crimes Unit. The IRS has infinite authority to investigate financial records and recommend cases for federal criminal prosecution based on their alleged tax crimes conclusions.
The man was accused of filtering $2.7 in commissions from insurance and investment product sales between 2003 and 2007. The IRS said he turned over the commission money to corporations controlled by the woman. Supposedly, she would then pay the man from the corporate accounts, thereby avoiding reporting that money as income in his tax returns. The two were also accused of reporting inaccurate business expenses on corporate returns.
If convicted on the conspiracy count, they could receive sentences of five years imprisonment, three years of supervised release and a $2.4 million fine. Sentences for the charge of filing false tax returns include three years in jail and one year of supervised release, but could probably be served concurrently. The maximum fines are the same for both charges.
Once this case moves to tax court, the defendants can be shielded from the jurisdiction of the IRS and the negotiating can begin. Often, there are reasonable explanations for why people file their taxes incorrectly. Particularly if the accused are new business owners who are not accounting experts and quite possibly do not understand the nuances between commission and payroll incomes. Honesty and frankness often lead to lesser penalties by the IRS.
Source: Woburn Advocate, “Woburn man indicted for tax fraud,” March 22, 2012