New York readers might assume that alleged violations of federal or state tax laws automatically implicate certain felony charges or potential prison sentences. However, a recent story illustrates that even an individual facing charges of tax fraud or evasion might be able to argue for mitigating circumstances that can result in a lower sentence.
A New York physician recently benefited from this legal strategy. The 62-year-old taxpayer came under the investigation of the Internal Revenue Service because of his holdings in an offshore bank account — worth almost $1.5 million. The man had inherited the Swiss bank account in 2000 from his father, allegedly with an instruction to secrecy for purposes of tax evasion. Deception seems to have been the reason the account was not labeled in the family name, but rather under a pseudonym, called the Wanderlust Foundation.
Although the man was not responsible for setting up the account, IRS officials and federal prosecutors pointed out that the man could have listed the account on his tax returns at any time. Instead, he perpetuated the deception and evaded paying federal taxes amounting to at least $216,000. The penalties for tax fraud and evasion are severe, however.
Although the man’s overdue tax liability was a six-figure amount, the penalties attaching to that liability required him to pay back more than $1 million. The man paid those fines and also pled guilty to the criminal tax evasion charge brought against him. His conviction could have resulted in imprisonment between 24 and 30 months, under the federal sentencing guidelines. However, his attorney successfully argued that the man’s attempts to rectify his wrongdoing, plus his nearly 30-year medical career, should justify a lesser sentence. The judge agreed, sentencing the man to only six months in a federal prison.
