A prominent cancer researcher has learned a valuable and humbling lesson: Do not try to outsmart the IRS. Peter Urrea was sentenced to 18 months in federal prison for cheating on his taxes. While most tax cheats avoid criminal prosecution and instead pay high civil penalties, Peter Urrea is an exception. What did he do to draw the ire of the IRS? Everything except waive a red flag in front of the IRS.
According to press reports and court records, Mr. Urrea, age 74, was recently sentenced to 18 months in federal prison and $ 376,679 in restitution. Needless to say, that’s a lot of time and money, especially for a person nearing retirement.
According to the Justice Department, Mr. Urrea attempted to cheat on his taxes. In what way? By preparing false W-2 statements which he represented had been issued by his employer. His goal was to make it appear as though he earned less money that he really did. Not content to stop there, Mr. Urrea falsified business expenses to further reduce his taxable income.
The IRS became suspicious when the employer’s real W-2 forms and those doctored by Mr. Urrea didn’t match. Upon realizing that the IRS was hot on his tracks, Mr. Urrea dug himself into a deeper hole, one which ultimately led to his demise. He forged a letter from the company’s vice president “explaining” the discrepancy. The problem was not only that the letter was forged, but that the vice president in whose name it was signed did not even exist.
While it may have been possible in the early stages of the audit to avoid criminal prosecution, all hope was lost the moment that Mr. Urrea attempted to cover up his tracks. Indeed, lying to IRS agents and creating false documents are not only crimes themselves, they area also affirmative acts of tax evasion. In other words, Mr. Urrea made a bad situation even worse.
What is the takeaway? First, if you believe that you may have committed a crime or find yourself the target of a tax evasion investigation, don’t represent yourself and try to outsmart the IRS. It didn’t work for Mr. Urrea and it sure didn’t work for Jordan Belfort in “The Wolf of Wall Street.”
Second, if Mr. Urrea’s case is any indication, no one is too old or too sympathetic for the DOJ to target for prosecution for tax evasion.
If you are facing a tax audit or criminal investigation for a violation of one of the tax laws, don’t go it alone. Seek an experienced criminal tax attorney immediately. Many taxpayers are unaware that making false statements to an IRS special agent or state investigator is a crime unto itself. Trying to cover up your tracks not only can result in additional charges but can also be used by the judge to enhance a sentence. Indeed, the federal sentencing guidelines allow judges to increase the sentence for any person who is convicted of obstructing the investigation of an original violation.