There’s no question that small business owners are good for the economy and our country as a whole. They create jobs and provide helpful services and products for consumers. However, some small businesses may not have the resources or staff available to handle their finances and accounting procedures in the company, which makes the actual owners themselves man the books, and do as they please with earned capital.
Some may be tempted to falsify earnings since they’re handling all of the calculations. This causes many business owners to not satisfy tax obligations, whether it’s accidental or purposeful, that they’re required to follow.
Last August, Thomas G. Klocker was fined $500,000 and sentenced to 6 months in federal prison due to tax evasion. The IRS investigation that followed showed that he used business money for expensive vacations and other personal expenses not related to the company.
In Thomas Klockers’ case, his actions weren’t due to lack of knowledge, it was done purposefully. According to the judge who was over the case, his actions were “very calculated and made to cheat the system.” According to prosecutors, Klocker committed tax evasion by lying to his tax preparers by telling them his family vacations were business trips and reporting fake losses.
Klocker purposely misused company money for his own comfort and lied about the use. His tax attorney tried to argue that he was a man of the community and did lots of charitable work, which he did. However, that didn’t stop him from being sentenced to 6 months in federal prison, along with a $500,000 fine.
No one wants to be Thomas Klocker in this case. Especially when you have to face a highly experienced and aggressive prosecutor from the federal government. He also paid more than $1.2 million dollars in restitution before being sentenced. With that being said, it’s best to understand the tax obligations that all businesses must obey and follow. The lavish lifestyle and additional income is not worth facing months or years in federal prison, along with a hefty fine and restitution that has to be paid.