One baker seems to have gotten caught with his fingers in the cookie jar:
Owner of Kasia’s Bakery in New Britain, CT Marian Kobryn pled guilty to tax evasion by operating his business on a cash-only basis and not reporting the cash income or (of course) paying tax on it. From 2010 to 2013, sales totaling $730,860 were deposited into personal bank accounts usually under $10,000 to evade bank’s currency transaction reporting requirements (another illegal practice known as “structuring.”
Pleading guilty to one count of making a false statement of a federal tax return, Kobryn was sentenced to time served due to serious health issues, Kobryn has been ordered to pay restitution in the amount of $435,00 to cover back taxes owed, hence being compelled to restore that raided cookie jar.
This might be called the Case of the Candid Calendar. A Wisconsin bar owner was sentenced to 18 months in federal prison and ordered to pay a $100,000 fine for filing false tax returns.
According to court records, Jared Jerome Hart, 36, of Eau Claire, Wis., owned a tavern called The Pickle Bar. His bar accepted payments only in cash, and at the end of each day, tavern employees would place daily sales in a safe for Hart to pick up. Hart would count the cash, and then record a number for the day in his own daily calendar. Hart would then deposit only some of the cash from into the business account.
Hart gave his accountants the payroll information, bank statements, the check register and vendor invoices. From these records, which Hart knew were incomplete, the accountants created the official books of the business. Hart never told his accountants about the cash he was “skimming” from the tavern, or the second set of books he was keeping at home. Hart’s daily calendars were discovered during the execution of a search warrant at his home in June 2012.
Between 2008 and 2011, there was more than a $1 million discrepancy between the gross receipts of The Pickle Bar reflected in the books the accountants maintained and the second set of books Hart maintained at his home.
Working on more than spines, a Pennsylvania chiropractor attempted a sort of tax decompression by manipulating and adjusting her tax return to file a 2006 federal income tax return that falsely claimed her taxable income was $89,754, when, in fact, she had taxable income of $1,151,928, and owed at least $363,566 in taxes for that year.
Unhappily for the chiropractor, Maria Giacalone-Hewson, 43, of Canadensis, Penn., who operated Canadensis Healthcare Inc. was sentenced to 15 months in prison for aiding the preparation and filing of a false federal income tax return and false statements relating to healthcare matters.
At her sentencing, Giacalone-Hewson was also ordered to pay $113,821 in taxes that she owed forthe years 2007 through 2010.
In addition to the prison term, Judge Mariani ordered that Giacalone-Hewson be supervised by a probation officer for three years following her release from prison.
The pluses and minuses of understating one’s income on a tax return include, on the plus side, one’s tax bill will be smaller. But, on the minus side, such an understatement is a crime with serious consequences.
All too often business owners find all that money they have withheld from employees’ paychecks much too tempting. Instead of paying it to the IRS, as they are obligated, they keep it, and use it for other things, like the electric bill, or a supplier whose supplies are necessary for the business to stay in business. Other people’s money used for things for which it was not supposed to be used. This can lead to problems. For example:
The mayor of Mount Vernon, N.Y., just north of Manhattan, has pleaded guilty to failing to file corporate and personal income tax returns. Failing to file tax returns is the same crime for which Hollywood film star Wesley Snipes famously was convicted and for which he spent nearly three years in federal prison.
Mayor Ernest D. Davis, 76, faces up to two years in prison as a result of his plea agreement.
For all the fear and anxiety people suffer in the run up to April 15th and the filing of tax returns, lots of taxpayers look forward to the refund to which they are entitled from the IRS as reported in their tax return. But, imagine you were not entitled to that so desirable refund, but a refund was coming to you anyway?
It would be like Christmas in April. Imagine that (indeed, rumor has it that John Lennon’s hit song, Imagine, left out the line “Imagine all the tax refunds….”)
(From the vault: A slightly different version of this post was published in the paper newsletter, sent to subscribers through the regular U.S. mail, in January 2013, on the occasion of the paper newsletter being revived to monthly publication, after a hiatus.)
It has been a while since the last edition of the through-the-regular-snail-mail Life, Law and Taxes, was completed and mailed out to you.
A Florida dentist faces up to three years in prison after pleading guilty to making a false statement on a federal income tax return.
A religious leader in Vancouver, Washington has a lot of atoning to do for his less-than-spiritual relationship to material things and the lure of filthy lucre.
Until last September, Maximo Garza, 47, was the pastor for Victory Outreach Church of Portland, a non-denominational church which has operated in Portland, Oregon, for more than 15 years. Garza was sentenced to five months in prison for aiding the preparation of a false tax return.
During his plea hearing, Garza admitted he provided false expense invoices which purported to reflect public relations and other services provided by Victory Outreach Church to William Thompson, who was then operating a mail-order divorce service using the name Hallwood Inc.
Thompson used the false invoices to take expense deductions on tax returns filed by Hallwood in order to fraudulently reduce his tax liability. Thompson pled guilty to tax evasion and was sentenced to a prison term in 2007.
Between 2001 and 2003, Garza provided invoices reflecting a total of $735,441 in false business expenses. Thompson agreed to let Garza keep approximately 10% of the expense amounts.