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Assault investigation leads to tax charges against victims

| Oct 2, 2020 | Criminal/Civil Tax Litigation |

You can call it adding insult to injury, but in this case the injuries were physical. In September 2018, York County, Pennsylvania, police responded to a shooting.

Four people were involved. Robert H. had apparently gotten into a physical altercation with his wife, Morgan. Matthew and Kimberly F., Morgan’s parents, tried to intervene. Kimberly brought a gun to the situation, but Robert took control of the handgun and fired multiple shots.

A shot struck Kimberly in the lower leg and two shots struck Matthew in the upper chest. Both were wounded.

Robert was initially charged with aggravated assault and other felonies, but the charges were ultimately dropped. This was probably due to a defense motion to suppress his statements after local authorities neglected to read him his Miranda rights. Moreover, Matthew F. said he couldn’t remember what happened.

The tale was far from over, however.

Local police find evidence of a tax evasion scheme

On the night of the shooting, officers noticed a trail of bloody footprints leading to a pool house. It’s unclear why any of those involved might have gone to the pool house, but inside was a garbage bag containing a large amount of bundled currency.

The officers obtained a search warrant and later discovered more cash attached to daily receipts. In the end, $817,713 was discovered. This, according to the IRS’s Criminal Investigation division, was income that Matthew and Kimberly had earned through their business between 2014 and 2017. However, they had not reported it on their federal tax returns. They allegedly reported only income received in the form of checks or credit card receipts, holding on to the cash tax-free.

The IRS determined that the couple owed $292,066 in back taxes.

They were also charged criminally. Last month, Matthew pled guilty to four counts of tax evasion and Kimberly to four counts of aiding in the preparation of false tax returns. Matthew faces up to 20 years in prison, fines totaling $1,000,000 and other penalties.

According to the York Dispatch, Robert and Morgan remain together and are living in Kimberly’s home. Matthew and Kimberly, however, have broken up.

This story does not represent the most common elements of a tax evasion prosecution. Usually, it is the IRS itself that discovers the hidden income, and the facts are rarely so captivating. It does serve to illustrate, however, that state and local authorities are likely to cooperate fully with IRS investigations. If you haven’t paid all of your taxes, you might be accused of evasion. Talk to a tax lawyer before it is too late.