Tax Fraud Indictment Against New York Construction Company Owner

August 27, 2013 — The Tax Relief and Health Care Act of 2006 established an IRS Whistleblower Office to give informants with unique information about tax crimes a way to collaborate with the IRS and receive compensation. Under the Act, tipsters may be awarded between 15 and 30 percent of the funds that the IRS collects based on the information. Rewards for tips about a private individual’s tax violations are restricted to cases in which the taxpayer’s gross income exceeds $200,000 for every taxable year at issue and the government collects more than $2 million. Rewards for tips concerning a corporation’s tax crimes may be given regardless of the amount of the recovery.

New York Contractor Charged With Failing to Report Income

A New York construction company owner has been indicted on federal tax evasion charges, according to the U.S. Department of Justice (DOJ). The charges against Tomas Olazabal, owner of Tupac Construction Corp., involve the contractor’s alleged failure to report income.

In 2007 and 2008, Olazabal’s construction company, based in Queens, New York, received checks from customers in payment for construction materials and services. The DOJ alleges that Olazabal then took his customers’ payments to check cashing companies, where Olazabal cashed the checks. Instead of recording the receipts, on his company’s books, Olazabal simply pocketed the cash and failed to disclose the earnings to his tax preparer.

The DOJ’s indictment charges Olazabal with filing false corporate tax returns for 2007 and 2008.  If convicted of the charges, Olazabal could face a fine of up to $500,000 and a maximum prison sentence of six years.

New York is one of few states that has expanded its state False Claims Act to include tax cases. In 2010, the State of New York amended its False Claims Act to permit recovery by a whistleblower who notifies the government of tax fraud in excess of $1 million. The New York False Claims Act allows any person who identifies a tax fraud to sue on behalf of the state. The allowable damages can be considerable — three times the amount of taxes owing. If the qui tam lawsuit is successful, the whistleblower may be entitled to a recovery ranging from 15 to 25 percent of the amount the government collects.

Insiders Notify IRS About Tax Fraud

When business owners cheat the government by engaging in tax fraud, the chances are good that someone inside the business will find out about it. Before insiders come forward to collaborate with the IRS, however, they should learn how the process works. The IRS tax fraud lawyers with Waters & Kraus provide honest tipsters with the legal counsel they deserve. Contact us by email or call our whistleblower attorneys at 855.784.0268 to learn how we can protect your interests.

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