Tax Representation and Marijuana

The Hells Angels chapter of the province of Quebec has filed a lawsuit against the attorney general of Quebec, seeking more than $2 billion in potential loss of revenue that legalization of marijuana will cost the biker organization.

The illegal production and consumption of non-medical cannabis was worth about $400 million last year in the province of Quebec alone, according to a Statistics Canada analysis of the underground economy.

“We estimate that Prime minister Justin Trudeau’s radical action of legalizing marijuana could cost my client’s organization a potential loss of $2 billion dollars in the next decade,” acknowledged Hells Angels’ lawyer, Brandon Tuggs.

“From growing operations to trimming, packaging, transportation, and selling, this new legislation will threaten the livelihood of hundreds of thousands of Canadian workers” he warns.

Prime minister Justin Trudeau’s nationwide legalization of marijuana on October 17 has enraged members of the Quebec chapter of the Hells Angels who believe legalization could destroy “hundreds of thousands of Canadian jobs”

“Many members of our organization fear they will lose their way of life if legalization is sustained,” said Quebec Hells Angels’ spokesman, Jean-Roch Fournier.

“I’ve been selling weed since I’m 12 years old” admits Gino Ouellet, 56, a Hells Angels member for the past 36 years.

“Do you think I’m going to want to go work at Walmart or McDonald’s at minimal wage? I don’t think so” he told reporters.

“Who’s going to want to give me a job? I’ve got tattoos all over my body and all over my face” asks another HA member, Gaetan ‘Lucky 3’ Leclerc, condemned in 1977 for triple homicide.

“It’s not the job of the federal government to regulate illegal drugs, they should take care of their own business and leave that to us” he argues.

Canada is the first country among developed nations to legalize marijuana.

In the United States, a number of states have currently legalized or decriminalized marijuana, but it is still illegal at the federal level.

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Just the Facts: Felony Charges in Criminal Tax - Attempt to Evade or Defeat Tax (26 U.S.C §7201)

Tax evasion is when a taxpayer willfully (meaning voluntarily and intentionally) uses illegal means to avoid paying their taxes. This charge can apply to an individual or corporation and carries a punishment of up to $100,000 in fines ($500,000 for a corporation), or five years of imprisonment, or both. Examples of tax evasion include claiming a dependent when you do not have one, keeping two sets of books with unreported income, or concealing assets by placing them in someone else’s name. The statute of limitations for tax evasion is six years from the last act of evasion. It is important to note that while criminal tax evasion is a felony, this is different than failing to file your tax returns.

Fraud and false statements (26 U.S.C. §7206 part 1)

When a taxpayer signs their tax returns or other documents under penalty of perjury they are attesting to the fact that they have examined the return or documents and all accompanying schedules and attachments, and to the best of the their knowledge and belief, it is true, correct, and complete. Therefore, anyone submitting a tax return or other document that they know to be false can be found guilty of a false statement tax crime. Every false document that is signed by the taxpayer could result in a separate count of the offense and each count is a felony that carries a maximum three (3) year prison sentence and a fine of up to two hundred and fifty thousand dollars ($250,000 USD). In order for the government to secure a conviction, they must prove beyond a reasonable doubt that:

There is at least one incorrect item, the misstatement was material, AND the taxpayer signed the false document willfully.
Examples of Perjury include:

1. Underreporting income on your tax return
2. Overstating deductions
3. Improperly calculating capital expenditures and depreciation deductions
4. Reporting a false source of income, even though the amount was correct
5. Giving a false answer on the foreign bank account question on the tax return
6. Failing to list all assets on a 433-a
7. Providing false information on form 656
Aiding or assisting the planning of a false or fraudulent document (26 U.S.C. §7206 part 2)

In addition to perjury, any person who willfully aids or assists in, counsels, or advises the planning of a tax return or other IRS document that is fraudulent or false as to any material matter can be found guilty of the aiding and abetting prong of the statute. This is a three year felony that carries a maximum three (3) year prison sentence and a fine of up to two hundred and fifty thousand dollars ($250,000 USD). An individual does not need to sign the document in question to be found guilty of this crime and this statute is often is used to catch tax planners, accountants, or lawyers who help taxpayers cheat on their taxes. This happens when a tax planner and a taxpayer work together in agreement to plan a false tax return, or when a tax planner falsifies a taxpayer’s documents and that taxpayer is unaware of the falsifications. In these cases, the tax planner will be prosecuted heavily because they likely have done this with other taxpayers.

Willful failure to collect or pay over taxes (26 U.S.C §7202)

This pertains to any person with a legal duty to collect tax and willfully fails to collect or pay these taxes owed. This will often apply to a taxpayer who owns a business and does not pay their payroll taxes.

Laundering of monetary instruments (18 U.S.C. §1956)

This charge will be brought against anyone who attempts to make money which was obtained through an illegal act, look legitimate. For example, if a taxpayer makes money as a drug dealer but funnels that money through a business bank account owned by this same taxpayer, then withdrawals that money to pay his employees, this is considered money laundering. Money laundering can also be any financial transaction whose principal purpose is violating laws, including tax evasion or making false statements to the IRS. This felony carries a prison sentence of not more than 20 years.

False, fictitious, or fraudulent claims (18 U.S.C. §287)

If you make a false claim to the government on your taxes, especially in order to receive a refund, you may be charged with a felony.

Attempts to interfere with administration of internal revenue laws (26 U.S.C §7212)

Any attempt to interfere with the administration of the laws set in place by the IRS, or any agent acting under the U.S. tax code. For example, if a taxpayer sends a letter to a revenue agent threatening them, that is considered obstruction.

Conspiracy to commit offense or to defraud United States (18 U.S.C. §371)

This involves two people who knowingly or voluntarily agree to either commit a tax offense or to defraud the government out of tax money.

Misdemeanor charges in criminal tax

Willful Failure to file a return, supply information, or pay a tax (26 U.S.C. §7203)

Any person who is required to file a tax return or pay a tax due and willfully fails to do either of these things may face misdemeanor charges. Generally there are two types of non-filers: those who filed in the past and have since stopped, or those who are in protest of tax laws. If you have filed your tax returns previously and then stop, the IRS will likely prosecute. If you are protesting tax due, you will likely only face a misdemeanor, as long as there is not a large amount of press surrounding your protest and you are not acting aggressively and the dollar amount is very little.

Offenses with respect to collected taxes (26 U.S.C. §7215)

This pertains to any person who willfully delivers or discloses a document they know to be false or fraudulent. For example, if a taxpayer is undergoing an audit and provides a false document to the auditor, they are subject to being charged with a misdemeanor.