Page 8 - White-Collar Crime

S8 | MONDAY, SEPTEMBER 29, 2014 | White-Collar Crime | NYLJ.COM

Government Looks to Pin Down Tax Evaders

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forms of tax evasion pursuant to 26 U.S.C. beth Taylor and Dolly Parton, among others. the case of a corporation), or imprisoned
BY TERENCE E. SMOLEV §7201: the willful attempt to evade or defeat From 1977 to 1978, Studio 54 generated not more than 5 years, or both, together
AND CHRISTINA JONATHAN
the assessment of a tax, and the willful revenues in excess of $5 million, equivalent to with the costs of prosecution.
attempt to evade or defeat the payment of over $1 billion today. Suspecting unaccounted As in any other criminal case, the govern-
T ax evasion, whether by individuals or a tax. Both offenses have three similar ele- ment maintains the burden of proving all of
businesses, is a serious problem in the ments that the government must prove for for monies, a search warrant was executed by the elements of a federal tax offense beyond
federal authorities, who discovered that the
United States. This is especially true for
conviction.
nightclub had failed to declare $2.5 million
a reasonable doubt. For evasion of assess-
owners of nightclubs, bars, restaurants and A classic example of a willful attempt to in state and federal taxes.
ment, the three elements that must be proven
other predominantly cash ventures, since evade or defeat an assessment of tax was On Jan. 18, 1980, the owners of Studio 54
are: (a) an attempt to evade or defeat a tax,
cash is harder to trace. In trying to combat demonstrated by the infamous Studio 54 pled guilty to tax evasion under 26 U.S.C. (b) an additional tax due and owing, and
this offense, the federal government has nightclub. Studio 54 was notorious for its (c) willfulness. Usually, the irst two elements
established deinite parameters to prosecute hedonism and eccentric parties and actually §7201, which is still the current law, amended are easy to substantiate; however, the third
the different forms of illegal conduct that con- paved the way for heightened investigations therein to increase the ines:
element is extremely dificult, as it dabbles
stitute this crime.
within the discotheque industry for tax eva- Any person who willfully attempts in into the mens rea of a defendant.
any manner to evade or defeat any tax
Under federal law, there are generally two
sion. The club’s status was irmly established imposed by this title or the payment To prove the irst element of tax evasion—
a week after its opening, when Bianca Jagger that there was an attempt to evade tax—the
entered through the doors on a white horse thereof shall, in addition to other penal- government must show that there was an
TERENCE E. SMOLEV practices law at the Law Oices to celebrate her 27th birthday. Thereafter, ties provided by law, be guilty of a felony actual afirmative act. Mere passive neglect is
of Terence E. Smolev, P.C. CHRISTINA JONATHAN is an it became the choice venue for celebrities, and, upon conviction thereof, shall be insuficient. The following conducts have been
associate at the irm.
including Michael Jackson, Elton John, Eliza-
ined not more than $100,000 ($500,000 in
held as afirmative acts to evade or defeat