FTB joint investigation results in San Diego woman’s tax evasion plea Adds fuel to SB1185 – State Agency collaboration in Super Centralized Intelligence Partnership

A recent high profile felony state of California income tax evasion case adds fuel to the State’s movement in developing a multi-agency partnership, to be known as the Centralized Intelligence Partnership.   This centralized agency will be used for the State of California to combat unreported and underreported economic activity.

This case, according to a press release from California’s Franchise Tax Board (FTB), involved a joint investigation between the FTB, San Diego County Sheriff’s Department, and the San Diego County District Attorney’s Office.   Ultimately one woman was charged – and plead guilty to- tax evasion, filing false tax returns, and grand theft after reportedly filing three false tax returns between 2006 and 2008. Investigators from the FTB stated that the defendant, Sarah Marie Thompson, withheld an estimated $50,000 in state income tax from the government agency by failing to report $550,000 worth of earnings she collected during those years.

In addition to misrepresenting her income to the FTB, Thompson has pleaded guilty to a charge of grand theft for embezzling money from her employer. Thompson worked as a corporate travel planner and used her access to a company credit card, which was intended to handle travel and accommodation expenses for her colleagues – to make a number of personal charges. In the same time frame as the reported tax evasion, Thompson managed to defraud her company of $615,000, which she covered up by doctoring the corporation’s records.  Penalties, interest and the cost of the investigation will be sought at the restitution hearing and we are awaiting the sentencing hearing in January 2013.

We believe that tax prosecutions such as Thompsons will be considered by the State of California legislation as they consider SB- 1185 – the Centralized Intelligence Partnership Act.

The bill provides that:

The Legislature intends this act to enhance existing efforts to combat the underground economy by institutionalizing collaboration among state agencies through a Centralized Intelligence Partnership, a pilot program that acquires relevant data for collaborative data analysis, economic threat assessment, strategic planning, and provides a referral tracking and value-added referral disbursement process to monitor the progress and measure the success of the partnership activities. This collaborative effort to combat the underground economy will…. The Legislature recognizes that the state needs to comprehensively address the underground economy and capitalize on each agency’s enforcement efforts and investigative resources by creating the Centralized Intelligence Partnership. A key element of this effort is to authorize and facilitate data and intelligence sharing among the Centralized Intelligence Partnership and state agencies. It is the intent of the Legislature in enacting this act to focus on the criminal and civil prosecution of those operating in the underground economy in flagrant violation of the law.

Click here for Actual Text of SB-1185 Centralized Intelligence Partnership Act.

As of August 16, 2012 the bill is in committee and under submission.   However, given that the State of California’s taxing authorities are already working with various state agencies to aid in the collection of delinquent taxes, it is not surprising that the government would seek to have an integrated data collection and fraud detection agreement amongst them to effectuate greater numbers of tax investigations and prosecutions of state tax crimes.     Moskowitz LLP, A Tax Law Firm believes this type of unified investigation technique by the State will yield in more multi-crime investigations, such as, Civil and Criminal tax investigations being conducted simultaneously, Asset Identification and seizure prior to any formal demands, and more.

Tax evasion and related crimes are serious charges.  Californians who are facing such a charge should consult with a tax lawyer who is well versed in the subtle nuances of the law which can be championed on the accused behalf.

Moskowitz LLP is a tax law firm located in California, with offices in San Francisco, the East Bay Area, and Los Angeles.  We defend clients against any type of criminal or civil charge, including complex white-collar crimes, and have a proud record of criminal and civil successes. We represent businesses and individuals, in a wide range of cases, including defending individuals against sophisticated financial crimes, such as tax fraud and the oft-related civil financial and tax charges.

We have over 30 years of experience representing individuals and businesses before the IRS, U.S. Department of Justice, State of California, and a variety of regulatory agencies.  We strive for investigations to be dropped by the taxing authorities.   However, if and when that is not possible, we offer our client a sophisticated approach to tax crime defense aimed at keeping your personal freedom, assets, and integrity intact.

Our law firm’s broad range of substantive experience permits us to offer an integrated approach to a full range of tax, criminal and civil matters. Criminal and government enforcement activities usually do not appear in isolation; they are often accompanied by parallel proceedings, civil litigation, and/or other governmental agency investigations. Our team of tax attorneys, criminal attorneys, CPAs and other professionals, enables us to assemble a comprehensive team to defend you while we make every effort to get you out of trouble as soon as possible.

Disclaimer:  Because of the generality of this blog post, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Prior results do not guarantee a similar outcome. Furthermore, in accordance with Treasury Regulation Circular 230, we inform you that any tax advice contained in this communication was not intended or written to be used, and cannot be used, for the purposes of (i) avoiding tax related penalties under the Internal Revenue Code, or (ii.) promoting, marketing, or recommending to another party any tax related matter addressed herein.

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