I know of a person "J.D", resident in California
, who owns an incorporated company in California, of which he is the only owner.
J.D omitted several hundred thousand dollars in gross receipts
from his 2007 and 2008 business tax returns
: he omitted about 400K in 2007 (return filed 2008) and 300K in 2008 (return filed 2009).
As the sole proprietor
J.D receives a salary of around 35K from his company.
He declares this amount as his income
in his personal tax
Business check copies and bank statements show that his personal
expenses are paid by business (including family vacations, personal lawyer, child
care provider, home, designer clothes, etc.): at least 40K to 50K each year.
J.D declared in a signed legal document that he has gross earnings of 35K from his business and, in addition, nontaxable perquisites paid through his business of $45K.
While he had no money in 2005, J.D. bought a home with 150K down in 2009.
Is this tax
evasion? If so, what consequences would J.D. likely face?
What is the statute of limitations
? 6 years?
If somebody reports this to the IRS
3949-A), would the IRS just ignore it, would there be any consequences?
What kind of specialist who can advise about this?