I need help with a tax problem. I understated my taxes in 09,10,

Asked about 1 year ago - Walla Walla, WA

My taxes were prepared by a cpa. I am not a tax person and have always had them prepared by a tax accountant . I dont know the first thing about taxes but I know it is my responsibility that they are done right. I Had multiple companies in 09;10. all are dissolved . I also filed a bankruptcy in 10. I think I need a attorney that knows these things. I cant get a straight answer it seems .

Attorney answers (5)

  1. Thomas J. Wagner

    Contributor Level 19

    9

    Lawyers agree

    Answered . Your answer is in the second to last sentence of your question. You need a seasoned tax attorney who can review your tax returns and the information used to prepare them and any other information you have about income and deductions and possibly prepare amended returns if the first ones were incorrect.

  2. John P Fazzio III

    Pro

    Contributor Level 16

    6

    Lawyers agree

    Answered . You need a seasoned local tax attorney who can correct any errors on your 2009/2010 taxes and ensure they are correct. Better to do this now than when an audit ensures and gross understatement or fraud penalties are on the table, or worse, criminal prosecution. Deal with this now and it will be a small problem. Bury your head in the sand and it can snowball into a real nightmare.

  3. Robert E. Harris Jr.

    Contributor Level 16

    4

    Lawyers agree

    Answered . Thomas J. Wagner spoke like a tax attorney. By the way, he is absolutely correct. If your situation is especially knurly, there are attorneys who have special degrees in taxation, look for taxation and LLM behind their names.

  4. Terrence Jay Moore

    Contributor Level 9

    3

    Lawyers agree

    Answered . If you know that you have not reported all income then you must file amended returns. I recommend that you file amended returns and soon as possible. If your CPA is not willing to do so find a new CPA. The burden for failing to list all the income falls on you and not your CPA. If you are assessed penalties you can likely have the penalties abated based upon your CPAs the mistake. You also indicated that you have multiple companies that were dissolved. If these companies had sufficient deductions then there maybe no taxable income. You want to file the amended returns before the IRS figures it out first. Delaying can result in criminal liability. Criminal liability vanishes after you file the tax returns.

    http://taxbizlawyer.com/tax-fraud-evasion-penal...
    The above is not legal advice. It is an illustration of options that can be used in certain situations. I have not examined all of your facts, if I did I might provide a different response.

    The above is not legal advice. It is an illustration of options that can be used in certain situations. I have... more
  5. Richard Gordon Stack

    Contributor Level 13

    1

    Lawyer agrees

    Answered . I agree with all of the advice that my colleagues have provided, except for the statement: "Criminal liability vanishes after you file the tax returns." That statement is overly broad. While it is true that a taxpayer who files a correct amended return after filing an incorrect (or false) original return BEFORE he is under IRS audit or criminal investigation will not be held criminally liable in 99% of cases, non-prosecution is not a guarantee. In that regard, in Badaracco v. Commissioner, 464 U.S. 386, 393, 78 L. Ed. 2d 549, 104 S. Ct. 756 (1984), the Supreme Court held that the taxpayer's filing of a correct amended return after filing a false original return that omitted more than 25% of his income, did not cure the tax fraud on that return, so as to trigger running of the 3-year statute of limitations for civil assessment. Thus, the IRS was free to assess tax for the year of the fraudulent return at any time.

    As is evident from the Court's following statements in Badaracco, the same principle would permit the U.S. to prosecute the taxpayer for filing the original fraudulent return: "Nothing is present in the statute [I.R.C. Sec. 6501(c)(1)] that can be construed to suspend its operation in the light of a fraudulent filer's subsequent repentant conduct" and "[i]t is established that a taxpayer who submits a fraudulent return does not purge the fraud by subsequent voluntary disclosure; the fraud was committed, and the offense completed, when the original return was prepared and filed." In other words, once a fraudulent return has been filed, it retains its fraudulent nature regardless of the taxpayer's subsequent attempts to rectify the original fraud.

    That having been said, if the asker files correct amended returns before the returns attract the scrutiny of the IRS, he should be safe from criminal prosecution because he will have effectively made a "quiet disclosure." The asker, however, will probably be liable for underpayment penalties, including possibly for civil tax fraud. The asker definitely needs to hire experienced tax counsel, who may want to retain a Kovel CPA, in connection with his contemplated quiet disclosure. Good luck!

    The answer to this question does not establish an attorney-client relationship. Moreover, this attorney is... more

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