17.04.2019
The Most Aggressive Tax Representation Allowed by Law
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Bronx Tax Preparer Created False Tax Returns for Orange County ResidentsWithout their Knowledge  Orange County District Attorney David M. Hoovler announced today that on Thursday, April 11, 2019, Michael G. Magnaldi, 54, of Pelham, a paid tax preparer, and the owner of MGM Tax Solutions, located at 1978 Williamsburg Road, Bronx, New York, was arrested and charged with multiple felonies related to the filing of eight sets false tax returns for Orange County residents. Magnaldi was arraigned before Town of New Windsor Justice Noreen Calderin on felony charges of Grand Larceny in the Third Degree, Criminal Tax Fraud in the Fourth Degree, and eight counts of Offering a False Instrument for Filing in the First Degree.  Felony complaints filed in the action allege that in 2016, and 2017, Magnaldi created New York State Personal Income Tax Returns containing false information for a number of Orange County residents who were clients of his tax preparation business.  The false information, which is alleged to have been placed on the returns without the knowledge of the clients, made it appear that Magnaldi’s clients were entitled to greater tax refunds than they should have received.  As a result, $6,091 in refunds were improperly sent to these clients.  Under New York State law, paid tax preparers must register with the New York State Department of Taxation and Finance, sign the returns they prepare and file them electronically. It is alleged that Magnaldi had his clients mail the fraudulent tax returns directly to the New York State Department of Taxation and Finance and failed to indicate on the tax returns that he prepared them as required. The charges were the result of an investigation conducted by the New York State Department of Taxation and Finance’s Criminal Investigations Unit. Magnaldi was arrested on April 11, 2019, by Criminal Investigators of the New York State Department of Taxation and Finance’s Criminal Investigations Division.  Magnaldi is next scheduled to appear in court on June 13, 2019.   The case is being prosecuted by Chief Assistant District Attorney Christopher Borek. District Attorney Hoovler thanked the New York State Department of Taxation and Finance for their investigation and referral of the case. “No one likes to pay taxes, but those who go to professional tax preparers have the right to know that their tax returns are being prepared properly and without fraud,” said District Attorney Hoovler.  “My office is prepared to prosecute anyone who uses unsuspecting Orange County residents to engage in fraud, regardless of where they live or work.  This case is only one example of the close working relationship which my office has developed with the Criminal Investigations Division of the New York State Tax Department.  I am grateful that this close coordination has resulted in Orange County regularly having among the largest returns on investment of any county in New York State under the Crimes Against Revenue Program [CARP] Program.” “We’ll continue to crackdown on criminal ‘ghost preparers’—those paid preparers who fail to sign their clients’ returns, register, e-file, or comply with other requirements intended to protect taxpayers from unethical tax preparers,” said John Harford, who leads the NYS Tax Department’s Criminal Investigations Division. “I commend our fantastic investigators and auditors and thank the Orange County District Attorney for prosecuting this case.” A criminal charge is merely an allegation that a defendant has committed a violation of the criminal law, and it is not evidence of guilt. All defendants are presumed innocent and entitled to a fair trial, during which it will be the State’s burden to prove guilt beyond a reasonable doubt. Civil and Criminal Tax Representation  Consult with an experienced Federal Tax Practitioner and Attorney today. Same day and emergency appointments may be scheduled Monday through Friday. 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Just the FactsFelony Charges in Criminal Tax - Attempt to Evade or Defeat Tax (26 U.S.C §7201)

 

Tax evasion is when a taxpayer willfully (meaning voluntarily and intentionally) uses illegal means to avoid paying their taxes. This charge can apply to an individual or corporation and carries a punishment of up to $100,000 in fines ($500,000 for a corporation), or five years of imprisonment, or both. Examples of tax evasion include claiming a dependent when you do not have one, keeping two sets of books with unreported income, or concealing assets by placing them in someone else’s name. The statute of limitations for tax evasion is six years from the last act of evasion. It is important to note that while criminal tax evasion is a felony, this is different than failing to file your tax returns.

Fraud and false statements (26 U.S.C. §7206 part 1)

When a taxpayer signs their tax returns or other documents under penalty of perjury they are attesting to the fact that they have examined the return or documents and all accompanying schedules and attachments, and to the best of the their knowledge and belief, it is true, correct, and complete. Therefore, anyone submitting a tax return or other document that they know to be false can be found guilty of a false statement tax crime. Every false document that is signed by the taxpayer could result in a separate count of the offense and each count is a felony that carries a maximum three (3) year prison sentence and a fine of up to two hundred and fifty thousand dollars ($250,000 USD). In order for the government to secure a conviction, they must prove beyond a reasonable doubt that:

There is at least one incorrect item, the misstatement was material, AND the taxpayer signed the false document willfully.
Examples of Perjury include:

1. Underreporting income on your tax return
2. Overstating deductions
3. Improperly calculating capital expenditures and depreciation deductions
4. Reporting a false source of income, even though the amount was correct
5. Giving a false answer on the foreign bank account question on the tax return
6. Failing to list all assets on a 433-a
7. Providing false information on form 656

 

Aiding or assisting the planning of a false or fraudulent document (26 U.S.C. §7206 part 2)

In addition to perjury, any person who willfully aids or assists in, counsels, or advises the planning of a tax return or other IRS document that is fraudulent or false as to any material matter can be found guilty of the aiding and abetting prong of the statute. This is a three year felony that carries a maximum three (3) year prison sentence and a fine of up to two hundred and fifty thousand dollars ($250,000 USD). An individual does not need to sign the document in question to be found guilty of this crime and this statute is often is used to catch tax planners, accountants, or lawyers who help taxpayers cheat on their taxes. This happens when a tax planner and a taxpayer work together in agreement to plan a false tax return, or when a tax planner falsifies a taxpayer’s documents and that taxpayer is unaware of the falsifications. In these cases, the tax planner will be prosecuted heavily because they likely have done this with other taxpayers.

 

Willful failure to collect or pay over taxes (26 U.S.C §7202)

This pertains to any person with a legal duty to collect tax and willfully fails to collect or pay these taxes owed. This will often apply to a taxpayer who owns a business and does not pay their payroll taxes.

 

Laundering of monetary instruments (18 U.S.C. §1956)

This charge will be brought against anyone who attempts to make money which was obtained through an illegal act, look legitimate. For example, if a taxpayer makes money as a drug dealer but funnels that money through a business bank account owned by this same taxpayer, then withdrawals that money to pay his employees, this is considered money laundering. Money laundering can also be any financial transaction whose principal purpose is violating laws, including tax evasion or making false statements to the IRS. This felony carries a prison sentence of not more than 20 years.

 

False, fictitious, or fraudulent claims (18 U.S.C. §287)

If you make a false claim to the government on your taxes, especially in order to receive a refund, you may be charged with a felony.

 

Attempts to interfere with administration of internal revenue laws (26 U.S.C §7212)

Any attempt to interfere with the administration of the laws set in place by the IRS, or any agent acting under the U.S. tax code. For example, if a taxpayer sends a letter to a revenue agent threatening them, that is considered obstruction.

 

Conspiracy to commit offense or to defraud United States (18 U.S.C. §371)

This involves two people who knowingly or voluntarily agree to either commit a tax offense or to defraud the government out of tax money.

Misdemeanor charges in criminal tax

 

Willful Failure to file a return, supply information, or pay a tax (26 U.S.C. §7203)

Any person who is required to file a tax return or pay a tax due and willfully fails to do either of these things may face misdemeanor charges. Generally there are two types of non-filers: those who filed in the past and have since stopped, or those who are in protest of tax laws. If you have filed your tax returns previously and then stop, the IRS will likely prosecute. If you are protesting tax due, you will likely only face a misdemeanor, as long as there is not a large amount of press surrounding your protest and you are not acting aggressively and the dollar amount is very little.

 

Offenses with respect to collected taxes (26 U.S.C. §7215)

This pertains to any person who willfully delivers or discloses a document they know to be false or fraudulent. For example, if a taxpayer is undergoing an audit and provides a false document to the auditor, they are subject to being charged with a misdemeanor.

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