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Massachusetts man accused of failing to file tax returns

On Behalf of | May 27, 2016 | Tax Evasion

The income requirements for filing taxes are quite low. If filing single, you need to file a federal return if you earned more than $10,300 in 2015. The amount doubles for a married couple. If you earned more than $8,000, you need to file a state return. Filing a return is necessary if you expect a refund of taxes withheld by an employer or through the Earned Income Tax Credit.

With this background, an investigation by the Boston Globe indicated that a Massachusetts investor and developer only filed one state return in the last quarter-century. In lawsuits questioning his dealings in real estate transactions, there is evidence that the man earned significant profits.

Trusts and gifts

The investigation found that many of the properties were purchased in the names of trusts. In one example, he purchased a property using a trust for $550,000. Seven months later, he turned around and sold it for about three-quarter of a million dollars. In other deals, he would title property in the names of his children.

Property gifted to others would not be taxable to the donor. However, property cannot be given away to avoid creditors or taxes. Yearly gifts are also subject to certain thresholds – $14,000 for an individual or $28,000 for couples in 2016.

Under the radar

Utilizing multiple companies and trusts may escape scrutiny for awhile. But consider that the IRS can generally look back 10 years. This means that once it starts investigating unfiled returns, you might be assessed substantial back taxes, interest and penalties. If a pattern emerges that shows willful tax evasion over a number of years, criminal charges are possible.

Address issues related to unfiled returns before the IRS or state tax agency comes asking questions. Speak with a tax attorney about coming into compliance.


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