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Domestic Voluntry Discloure as an Alternative to Indictment

By admin of MillarLaw A Professional Corporation On Monday, June 8, 2015

The United States Attorney for the Southern District of New York announced that the

“owner and operator of DNS Construction Corporation, was sentenced today in Manhattan federal court to a term of five years of probation and $883,730.52 in restitution for committing two counts of tax fraud by failing to pay over $800,000 in income taxes and payroll taxes from 2006 to 2008.”

The case was an all too common example of domestic tax fraud and evasion. The plan involved two interrelated parts.

” To execute the first scheme, XXXXX cashed checks at multiple check-cashing businesses in Manhattan and Brooklyn, rather than depositing those checks into the bank accounts of DNS, so that he could conceal DNS’s true revenues from state and federal tax authorities. To carry out the second scheme, XXXXX paid DNS’s employees primarily in cash so that he would be able to omit these salary payments from DNS’s federal tax returns without detection by tax authorities. By failing to report these payments, XXXXX underpaid the federal payroll taxes due and owing by DNS during this period.”

A variant of the scheme occurs when the principal of the company opens a fictitious name account and deposits some of the customer checks into that account, but gets “less cash” in amounts intended to avoid the Bank Secrecy Act’s currency transaction reporting rules, which some people erroneously believe to be $10,000 per transaction. By using this technique some taxpayers may find themselves in violation of the anti-money laundering laws by engaging in “structuring”.

If a taxpayer has engaged in the above described form of tax fraud or evasion, prosecution may be avoided by coming forward through a domestic voluntary disclosure. If made before a Suspicious Activity Report is filed by the bank or an audit has begun, the domestic voluntary disclosure can avoid prosecution, and perhaps minimize income and payroll taxes and penalties.

We at MillarLaw have substantial experience in dealing with construction industry tax issues and domestic voluntary disclosures. We have the ability to analyze income tax, payroll tax, worker’s compensation premium deficiencies and immigration issues which arise in the construction industry or other business contexts. The best way to minimize a tax problem is to recognize it and fix it before the government acts, rather than offer excuses at sentencing.

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