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$738,000 is a lot of tax, penalties and interest

 

A Michigan man sentenced to two-years in prison for tax evasion after being convicted in April. He worked with exotic cars and it appears that the sale of a rare engine left a paper trail that led to his conviction.

 

He sold a 1956 Ferrari engine to a woman in Belgium. She wired an apparent payment for $610,000. However, the payment was never reported on his federal income tax. The payment was found after an audit of the tax return filed that year. He argued he had not intended to deceive the IRS. He also claimed he had not read his tax return and had merely signed it. 

 

If you run a business, especially if you have complex financial transactions, it is essential that you fully understand all how those transactions function and you should sit down with your tax accountant and tax attorney and go over your tax return, because while there is "innocent spouse relief" to tax prosecutions, there is generally no "innocent businessperson defense."

His arguments were further undermined by the timing of the creation of a corporation and the structuring of some of the financial transactions.

While there may be legitimate business reasons for some unusual transactions from time to time, demanding payment in cash from your customers, or the use of money orders and prepaid debit card and the purchase of gold and silver coins with the unreported income are more difficult to characterize in a sympathetic light.

In addition to the two-year prison sentence, he will also be required to pay $738,904 back taxes, penalties and interest.

Source: freep.com, "Tax-cheating Ferrari mechanic gets 2 years in prison," Tresa Baldas, October 30, 2015

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