What happens if you don’t file your taxes?
We frequently hear or read stories about people who are finally caught after not having paid their income taxes for many years. Many of us wonder how it is possible that the offenders aren’t caught sooner; we also speculate on what happens when they are caught.
The IRS wants individuals to pay their taxes in a timely fashion and charges heavy penalties if they do not. Nonetheless, it is considered a much more serious offense not to file, than not to pay, taxes. The IRS has many ways of arranging payment if you fear filing because you don’t have the funds to pay your back taxes. If you find yourself in this troubling situation, it is crucial to consult with an adept and knowledgeable tax attorney as soon as possible.
Case in Point
This past March, an attorney named James Patrick Kleier was immediately suspended from practicing law for 90 days and placed on probation for 2 years after he acknowledged failing to file tax returns for 11 years, based on his total earnings of $1.3 million. Because Kleier was himself a tax attorney and a partner in a tax law practice, his misconduct was considered intentional and evidence of “moral turpitude.”
He was held liable although he had previously practiced law for 20 years without any misconduct on his record. While Kleier provided evidence that he had done extensive pro bono service, including writing and giving lectures, and cooperated with authorities in the investigation of his misdeeds, the fact that he had been failing to pay his own taxes during the same time period greatly weakened his case.
Kleier pleaded guilty to two counts of failing to file income tax returns. It was established that during the period from 1999 to 2010 Kleier had failed to report any income. In her decision, California-based U.S. Attorney Melinda Haag noted that “Our tax system is vital to this country…funding programs and services like roads, water, education, and agriculture, accessed and needed by millions of people every day,” and that “the defendant, a tax attorney, should and did know that he is required to file tax returns and pay taxes.”
Penalties for Failure to Pay Income Tax
The maximum penalty for each count of failure to file a tax return is one year of imprisonment and a $100,000 fine. The sentence for Kleier, who accepted a plea bargain, was 12 months in prison and restitution of $650,993.
The Defendant’s Credentials
Prior to his conviction for tax evasion, Kleier was a well-respected lawyer, an author, a frequent lecturer on criminal tax law, chairperson of local and national bar associations and chairperson of a task force for the American Bar Association’s Section of Taxation. He has now added another credential to his list: convicted felon.
Any number of reasons can keep you from filing taxes during a given year or even during an extended period. If you have neglected to file taxes, don’t delay any longer. Instead of becoming an accomplice in your own downfall, you should engage the services of a highly competent tax attorney to assist you in filing back taxes and arranging to pay them.
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