Monthly Archives: June 2016

How to Stop a Civil Tax Audit from Becoming a Criminal Prosecution

By:  Coleman Jackson, Attorney, CPA
June 30, 2016

selected for tax audit

When the taxing authorities visits your home or business establishment, make sure you first get their business card(s) to determine who they are.  For example, federal tax investigations are handled by the IRS’s Criminal Investigation Division (CID).  If a Special Agent from CID visits you think the same way that you would if any law enforcement officer visited you at your home or business on official business.  Anything that you say could possibly be used against you in a court of law.  You need legal representation before you proceed with answering any questions because you could be inadvertently making admissions that can be used against you in a criminal prosecution.  You must always be truthful when answering questions with a law enforcement officer whether the officer is your local police, or tax investigator with CID or criminal tax investigator with the Texas Comptroller of Public Accounts Office.  Always keep in mind that non-compliance with federal and state tax laws can lead to civil penalties as well as criminal prosecution under some circumstances.

What kind of taxpayer conduct could turn a civil tax audit into a criminal prosecution?  Tax fraud with the intent to evade federal and state tax statutes could lead to criminal prosecution in certain circumstances.

What kind of taxpayer conduct could turn a civil tax audit into a criminal prosecution?

Historically the courts have developed certain, so called, badges of tax fraud.  When the following badges of tax fraud exist; particularly if they establish a pattern of deceptive behavior, could lead to a criminal tax indictment under federal and state tax laws:

  1. Understating of income;
  2. Maintaining inadequate records;
  3. Implausible or inconsistent explanations of behavior;
  4. Concealing income or assets;
  5. Engaging in illegal activities;
  6. Failing to cooperate with tax authorities;
  7. An intent to mislead; and
  8. Filing false documents

When taxing authorities come knocking, it is important that taxpayers quickly learn who they are, be honest, up front and cooperative with the investigation or audit from beginning to end. Mere hiding the ball and being elusive and mean could potentially turn a civil audit into a criminal investigation. If the taxpayer has nothing to hide, why are they pushing back so hard when a tax examiner shows up at their door? Sometimes tax authorities go undercover. In these cases the taxpayer may not even know that they are being interviewed by a special agent of CID. Sometimes tax investigators for Texas and the U.S. government pose as purchasers, or buyers, or vendors, or some other gist. A tax counselor is a prudent business decision from the first hint of learning that the taxing authority visitor is from IRS’s CID or the correlating criminal investigation division of Texas. If there is any doubt as to the nature of the taxing authorities visit, tax counsel should be involved in that first encounter if at all possible.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader. You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

Your Past May Haunt You: In a Good Way

By:  Coleman Jackson, Attorney
June 29, 2016

Are you an immigrant hiding in the shadows, doubting whether you have any hope of immigrating lawfully to the United States?

Are you an immigrant hiding in the shadows, doubting whether you have any hope of immigrating lawfully to the United States?  U.S. Immigration law is complex.  Do you have a grandfather or grandmother who is a United States Citizen or Lawful Permanent Resident?  Let me tell you about some long ago U.S. Immigration Policies that could be a beacon of hope.  In fact it could present to you a clear immigration path.

Long ago, grandparents may have filed immigrant petitions for your parents that could possibly benefit you today in your quest to get a Green Card (Lawful Permanent Resident Status).  Immigration and Nationality Act Section 245(i) as amended by the Legal Immigration Family Equity Act (LIFE) Amendments of 2000 affects eligibility and adjustments of status of certain immigrants who benefits from a petition filed long ago by a parent or grandparent.  These grandfathered primary beneficiaries and derivative beneficiaries (e.g. children of primary beneficiaries) of old Family Immigration Petitions could under INA Section 245(i) be permitted to apply to adjust status notwithstanding the fact she or he entered the Unites States without inspection, overstayed a visa authorization, or worked without authorization.   Bottom line; immigrants need to have family discussions because even a grandchild could possibly be grandfathered by a Petition filed years ago by their grandparent for their mom or dad.

This is a very complex area of law.  A visa must be available and other intricacies of immigration law apply.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432 

Are You a Tax Turtle?

By:  Coleman Jackson, Attorney, CPA
June 14, 2016

When a taxpayer is constantly on the move , these taxpayers are considered tax turtles in U.S. tax law

Are you a tax turtle?  What exactly is a tax turtle?

Typically when we think of the term “home”, we are thinking about where a person resides.  Home is where a person personally lives; but in U.S. tax law, this is not what the term “home” means.  In tax law, the term “home” means where the taxpayer has his principal place of employment.  If a taxpayer does not have a principal place of employment, tax law defines “home” as where the taxpayer incurs substantial continuing living expenses.  Barone v. Commissioner, 85 T.C. 462, 465 (1985), aff’d without published opinion, 807 F.2d 177 (9th Cir. 1986).

When a taxpayer is constantly on the move (such as long haul truck drivers and other drifter types); quite often, these taxpayers are considered “tax turtles” in U.S. tax law.  A tax turtle is someone who carries their home on their back because they are in constant motion.  Such a person could find it difficult to satisfy the high hurdle of showing that they are entitled to travel expense deductions under IRC 162 because they have no stationary place of business nor place where they incur substantial continuing living expenses.  If challenged by the IRS, the turtle taxpayer bears the burden of proof that they do not carry their home on their back.

Some of the factors the IRS usually use to decide whether a taxpayer is an itinerant are:

  1.  The business connection to the locale of the claimed home;
  2. The duplicative nature of the taxpayer’s living expenses while traveling and at the claimed home; and
  3. Personal attachments to the claimed home. 

Taxpayers who move around a lot need to do proper due diligence before taking any tax return position related to traveling expense deductions because the taxpayer could be exposed to penalties.  Taxpayers could potentially avoid penalties if they can show that they relied on the advice of a professional tax advisor.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432