Maryland Indian Emporium Owner Guilty of Tax Fraud & Evasion

Maryland Indian Emporium Owner Guilty of Tax Fraud & Evasion

Maryland Indian Emporium Owner Guilty of Tax Fraud & Evasion

The US government continues to pursue tax fraud and tax evasion cases against US Taxpayers who fail to properly report all of their income. In order for the US government to pursue tax fraud and division, they must show that there was an intent to deceive or evade taxes. In the case of Sunil Chawla, the Internal Revenue Service pursued a case for underreported income, in which the IRS alleges that there was a significant amount of unreported income which led to significant tax liability. In turn, the US government was able to obtain a guilty plea in order to preserve resources and not have to pursue a trial.

As provided by the DOJ:

Ocean City Business Owner Admits to Intentionally Failing to Report $70,000 in Annual Income Tax

      • Baltimore, Maryland – Sunil Chawla (“Chawla”), age 66, of Berlin, Maryland, pleaded guilty today to tax fraud.  As part of his plea agreement, Chawla will be required to pay $70,000 in restitution.   

      • The guilty plea was announced by United States Attorney for the District of Maryland Erek L. Barron; Special Agent in Charge Darrell J. Waldon of the Internal Revenue Service – Criminal Investigation, Washington, D.C. Field Office; and Acting Special Agent in Charge Selwyn Smith of Homeland Security Investigations (HSI) Baltimore.

      • According to his guilty plea, Chawla owned and operated “India Emporium”, a seasonal retail store near Ocean City, Maryland for over 20 years.  Chawla also received income from a business (Company 1) operated by his son, defendant Saurabh Chawla (“Saurabh”), age 36, of Aurora, Colorado, from 2009 to August 2019.  Chawla’s duties at Company 1 included receiving electronics and other items obtained by Company 1.  Chawla was involved in reselling, maintaining and tracking Company 1’s inventory, and packaging and shipping daily orders as directed by his son, Saurabh.  From 2009 to 2018, Chawla received an annual salary from Company 1 of approximately $60,000.  Each month, Chawla frequently wrote himself a $5,000 check that was drawn against Company 1’s bank account.  In 2009 and 2010, Chawla intentionally did not report any income from Company 1.  Ultimately, from 2012 to 2018, Chawla repeatedly engaged in tax fraud by underreporting his $60,000 annual salary at Company 1, resulting in a tax loss of $70,000 to the IRS.

      • Chawla and Saurabh discussed and agreed on the amounts that Chawla would list on his tax returns, which would then be listed on Saurabh’s returns as an expense of Company 1.  In later years, part of Chawla’s compensation was fraudulently classified by Chawla and Saurabh as a non-taxable gift rather than compensation related to Chawla’s employment in an effort to lower Chawla’s taxable income in any given year. 

      • Further, Saurabh failed to file a Form 1099 each year to report Chawla’s income to the IRS.  In September 2013, Chawla emailed Saurabh, expressing his concern about whether a 1099 had been filed by Company 1 that would require Chawla to pay self-employment taxes.

      • As stated in his plea agreement, Chawla submitted a U.S. Joint Income Tax Return, IRS Form 1040, for the year 2017, in which he falsely reported that his adjusted joint gross income was $19,849 and that his total tax due was $3,571 when, in fact, Chawla knew that his joint taxable income was much greater than the amount reported. 

      • In September 2021, U.S. District Judge Catherine C. Blake sentenced co-defendant Saurabh Chawla to 66 months in federal prison, followed by three years of supervised release for conspiracy, interstate transportation of stolen goods, and tax evasion.  The Court also ordered Saurabh Chawla to pay $713,619 in restitution and sign an order of forfeiture requiring him to forfeit several fraud related assets including a 2013 Tesla Model S, $2,308,062.61 from accounts held in his name, and the sale of property in Aurora, Colorado.

      • Sunil Chawla faces a maximum sentence of three years in federal prison followed by one year of supervised release for tax fraud.  

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