Here are a couple of cases I was looking at. Let’s start with the most famous – Wesley Snipes.
The prosecutors in the Wesley Snipes case filed a motion this past Thursday to rescind Mr. Snipes freedom while he awaits his appeal. Right now he’s looking at somewhere around $17 million in back taxes, penalties and interest and 3 years on the civil charges of fraud. It’ll take a few weeks to work through the system. It’ll be interesting to see what happens. Will he stay? Jet off to an island paradise again?
Another less publicized case was that of a dentist who operated three practices. During an audit, it was determined that he owed $17,917 in 2000 and $5,740 in 2001, and imposed penalties for fraud. They appealed.
Although the dentist and his wife had three bank accounts for the businesses (one for each), they were in the habit of depositing business income into their personal accounts. Prior to 2000, their tax preparer fixed the bookkeeping at year end. Starting in 2000, they hired a bookkeeper, who apparently didn’t fix it.
The auditor discovered the deposits in the personal account which were not claimed as income by the dentist. And even though the dollar amount of tax wasn’t nearly as big as Mr. Snipes, it still looked there was real intent to defraud.
On appeal, though, the court agreed with the dentist and his wife that they were just inept. In 2001, the new bookkeeper had caught on to what they were doing and started making entries to correct.
They still had to pay back tax, regular penalties and interest, but were able to avoid the fraud charge.