A simple Google search of the words ‘tax evasion and bank fraud’ will bring up the latest headline of Todd and Julie Chrisley's conviction. Being a big fan of their series, I was saddened to hear they were facing tax evasion charges. Being in the industry, I know the feds do not move forward with cases that do not have a high probability of conviction. Nevertheless, here we are and we can all learn a thing or two from this case.
The federal government came out with tons of aide to help individuals and businesses survive the pandemic. Businesses now had the opportunity to access easy capital to fund operations that is typically unavailable. There was this one catch. The business documentation had to be right. That’s right. Businesses were actually expected to have financial statements to prove operations. Just like that, people began to create false documents to access the capital. Some people were so bold as to post their services for fake documentation on social media.
According to court documents, the Chrisleys “Fabricated bank statements listing inflated balances, personal financial statements containing false information about available funds, false invoices, and false audit paperwork.” Anytime we falsify paperwork and submit it to a government entity or bank, we are committing a federal crime. It may seem harmless, but it is not.
Now, let’s discuss the whole tax evasion thing. One of the hardest parts of being a tax professional is people’s desire not to pay taxes. Let me tell you something about our uncle named Sam. He wants his money. He is equal opportunity. He does not care about race, gender, or sexual orientation. He cares about that green.
According to the feds, the Chrisley’s attempted to hide income from tax authorities by transferring ownership of the company to Todd’s mother. Transfer of property is a bright red flag for tax evasion. In addition, the couple failed to file tax returns from 2013 to 2016 according to the feds.
What lessons can we take away from this high-profile couple’s tax woes?
1. There are ways to effectively reduce your tax liabilities through tax planning. They actually had taken the first step to do this thing right by creating a business for their income. They simply did not follow through with a tax savings strategy using IRS rules.
2. File your taxes on time. When you don’t file your tax returns, the IRS can file one for you. It’s called a substitute for return. They also have the ability to do a lifestyle audit to determine your income based on your banking records and then assess taxes based on their findings.
3. Do the right thing. Their accountant was also convicted for filing false tax returns. His conviction could have been avoided by simply saying no.
In the end, the couple will have to pay the IRS the assessed taxes. They can get this part right by setting up an installment agreement or using another tax resolution strategy. If you or someone you know find yourself in a similar situation, you can take the steps to get on the right side of the IRS. Our office is here to help with tax debt relief.
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Alexandria Louis Tax Solutions, LLC
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