From the Tax Law Offices of David W. Klasing - Florida Businessman Indicted for Evading IRS Collection of Nearly $2 Million in Taxes

IRVINE, Calif., Feb. 13, 2025 /PRNewswire/ -- According to a Department of Justice press release, a Florida businessman was recently indicted by a federal grand jury for tax evasion, failure to file a tax return, and failure to pay federal taxes. This case demonstrates the severe legal consequences that can result from being accused of failing to comply with federal tax obligations. If you have not filed a tax return for one or more years, or have taken a position on a filed tax return that was false, it is critical to consult with an experienced tax defense attorney to avoid an audit and or criminal tax prosecution.

Defendant Allegedly Hid Assets to Avoid Paying Over $1.9 Million in Back Taxes

Court records reveal that Phillip Mak, a businessman from Jacksonville, Florida, earned approximately $10.3 million between 2008 and 2020. Prosecutors allege that despite generating a significant income, Mak failed to file federal tax returns for most of those years (except for two) and did not make any payments toward the tax that he owed. The IRS assessed roughly $1.9 million in unpaid taxes, penalties, and interest against him for tax years 2008, 2009, 2012 through 2015, and 2019 through 2020.

Federal prosecutors allege that Mak took deliberate steps to conceal his assets from the IRS. According to the indictment, he transferred $1 million in cash to his domestic partner's bank accounts to prevent the IRS from seizing those funds. Additionally, after being interviewed by IRS investigators, he transferred ownership of his personal residence to his domestic partner's trust, making it more difficult for the government to take enforcement action. In an attempt to further obscure his financial activity, Mak created a nominee entity and began depositing his income into a bank account held in that entity's name. By doing so, he allegedly sought to prevent the IRS from tracing his earnings and recovering the outstanding tax debt.

The indictment asserts that Mak's actions resulted in a tax loss of more than $1.92 million to the government. If convicted, Mak faces up to five years in federal prison for tax evasion and up to one year in federal prison for each count of failing to file tax returns and failing to pay taxes. In addition to a potential prison sentence, Mak may also be ordered to serve a period of supervised release following his incarceration. Lastly, Mak could be required to pay restitution to the government, representing the tax loss that he caused.

In addition to the criminal penalties, the IRS has pretty broad authority to take civil enforcement actions, including liens and levies. Taxpayers who fail to comply with federal tax laws often find themselves not only facing criminal tax prosecution but also collection efforts that can result in the seizure of assets and garnishment of income. It's important to note that the latter can occur without the former.

Understanding the Dangers of Continued Tax Fraud or Evasion

This case serves as a clear reminder of how seriously the government takes tax evasion and the non-filing of tax returns. The IRS has prioritized enforcement against medium to high income individuals who fail to meet their tax obligations. When individuals fail to file tax returns for extended periods of time, they become a prime target for criminal tax prosecution.

Mak's case also highlights the potential pitfalls of attempting to conceal assets from the IRS. Transferring money to partners, placing assets in trusts, or using nominee entities may, on their face, feel like effective strategies for avoiding tax liability, but these actions often have negative consequences when discovered. When the government identifies such transactions, they are frequently used as evidence of willful tax evasion, increasing the likelihood of criminal prosecution.

Lastly, it is important to understand that the IRS has extensive tools that it employes to uncover tax fraud, including complex data analytics systems. Taxpayers who successfully evade detection for years often find themselves facing scrutiny at some point. When that happens, individuals and businesses who have engaged in fraudulent tax activity often face steep penalties.

Consulting a Tax Attorney Before It's Too Late

For individuals who have unfiled tax returns for one or more years, unpaid tax liabilities, or concerns about the truthfulness of tax returns they've already filed, seeking the assistance from a tax lawyer is critical. As mentioned earlier, the IRS is becoming more and more aggressive in its enforcement actions, particularly against middle to high income individuals who fail to report and pay taxes. A tax defense attorney can help taxpayers assess their exposure, develop a plan for compliance, and negotiate with the government to mitigate potential penalties.

Taking proactive steps to resolve your tax issues before the IRS initiates an investigation (or a referral to IRS Criminal Investigations) can make a significant difference in the outcome. Many taxpayers who come forward and voluntarily correct past issues and come into compliance before the government takes action can avoid criminal prosecution. However, those who wait until they are under investigation or caught may find themselves facing serious legal consequences that could have been prevented with earlier intervention, as is being experienced by the defendant in this case described above.

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Public Contact: Dave Klasing Esq. M.S.-Tax CPA, [email protected]

SOURCE Tax Law Offices of David W. Klasing, PC