If you ask a financial institution for a loan for your business, the bank will likely want to see your tax returns and/or financial statements. One sure way to get in trouble is to tell the bank all about your positive earnings but tell Uncle Sam that your business was a loser.
That’s a new definition for variable income—it depends on whom you’re talking to. Unfortunately, when you deceive the IRS it’s also called tax evasion. Sabi Atteyih owned a popular Madison, Wisconsin restaurant called Casbah. He did exactly what I described above and on Wednesday he pleaded guilty to tax evasion. Based on federal sentencing guidelines Mr. Atteyih is looking at somewhere under two years at ClubFed.
So if you’re going to ask a bank for a loan, you should tell the truth (doing otherwise is fraud). And tell the truth to the IRS or you could see tax evasion in your future.