From the Tax Law Offices of David W. Klasing - Georgia Man Sentenced to Prison for Tax Evasion and Failing to File Returns

IRVINE, Calif., Aug. 21, 2024 /PRNewswire/ -- According to a Department of Justice press release, a Georgia man was recently sentenced to serve four years in federal prison after being convicted of tax evasion and failing to file federal income tax returns. This story underscores the potential consequences that can arise when federal or state tax laws are intentionally broken. If you have filed a tax return that was not truthful or have failed to file a tax return for one or more years, altogether, it is critical to discuss your case with an experienced tax defense attorney.

Defendant Earned Substantial Income Brokering Precious Metals but Failed to Pay Tax

Court documents reveal that Saleem Hakim was sentenced to four years in prison for tax evasion and failing to file tax returns. From 2009 to 2013, Hakim earned over $2.8 million in commissions from brokering precious metals but did not file tax returns, instead using the income to fund his lavish lifestyle. Additionally, from 2020 to 2022, Hakim and his wife earned over $260,000 from selling jewelry and luxury handbags but did not file returns. Hakim also attempted to conceal income by diverting it into a trust and attempted to obstruct the IRS criminal tax investigation by drafting false statements.

In addition to serving four years in federal prison, he was ordered to serve three years of supervised release, commencing upon the completion of his physical incarceration. Hakim was also ordered to pay $1,219,225.73 in restitution to the IRS, representing the tax loss that he caused.

This case entails exposure that can ramp up simple misdemeanor non filing to felony tax evasion. The "Spies evasion" doctrine is, essentially, one of the ways of committing tax evasion. It is a legal theory that finds a taxpayer criminally liable when he willfully (1) fails to file a tax return, and (2) his action is coupled with an "affirmative act of evasion," like actively concealing or misleading the government. In Spies the Supreme Court identified at least seven examples of conduct that constituted affirmative acts of evasion. The Court stated: [We] "think [the] affirmative willful attempt may be inferred from conduct such as [1] keeping a double set of books, [2] making false entries of alterations, [3] or false invoices or documents, [4] destruction of books or records, [5] concealment of assets or covering up sources of income, [6] handling of one's affairs to avoid making the records usual in transactions of the kind, and [7] any conduct, the likely effect of which would be to mislead or to conceal." Spies v. United States, 317 U.S. 492, 499 (1943).

What is an "affirmative act" for purposes of the Spies evasion doctrine? It may be any number of things, including but not limited to, making a false statement to the IRS, either oral or written. Importantly, the statement could be made before, after, or at the same time as filing the tax return. Thus, for example, a taxpayer makes an "affirmative" act of evasion after failing to file his income tax return when he lies to the IRS about how much income he earned. Accordingly, a taxpayer's lying about earnings could also earn him jail time-and heavy penalties.

Coming Back into Compliance with the Assistance of a Tax Lawyer

As you can tell from the penalties the defendant in the above case faced, the repercussions for willfully failing to comply with tax laws can be life-altering. If you have failed to file a tax return for one or more years, or you have filed a tax return that could not be supported upon an examination by the IRS or a state tax authority, it is in your best interest to seek the assistance of a seasoned tax lawyer. Together, you will work to understand the pertinent facts of your case and draw up a roadmap to bring you back into tax compliance.

We Are Here for You

Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.

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