Colorful tech figure and sometimes taunter of the IRS John David McAfee has been indicted for federal income tax evasion. Given his profile, particularly such antics as proclaiming that he isn’t filing tax returns but the IRS can come find him, it may not seem a surprise that McAfee is in some serious hot water. He has long been completely out of the antivirus company that bears his name, but he has still been in the news in numerous controversial ways over the last decade. Everyone has to file tax returns of course, even McAfee, and failing to file can be criminal. The indictment dates from June 15, 2020, but it was just unsealed following McAfee’s arrest in Spain where he is awaiting extradition to the U.S. This is an indictment, so the charges have yet to be proven. But it may be hard for McAfee to explain himself after he once colorfully admitted to not paying taxes in a video posted on Twitter. According to the indictment, McAfee earned millions from promoting cryptocurrencies, consulting, speaking, and selling the rights to his life story. From 2014 to 2018, the feds allege that McAfee failed to file tax returns despite receiving considerable income. How could he not file returns or report income?
The indictment alleges that McAfee directed that payments due him should instead go into bank accounts and cryptocurrency exchange accounts in the names of nominees. Hiding things, after all, doesn’t change the tax impact, and can actually make matters worse. The indictment also claims that he tried to evade the IRS by putting other names on real estate, a yacht and more. These are only allegations, but if he is convicted, McAfee faces a maximum sentence of five years in prison on each count of tax evasion, and a maximum sentence of one year in prison on each count of willful failure to file a tax return. He can also expect to pay taxes, big penalties, and interest. McAfee is presumed innocent unless and until he is proven guilty beyond a reasonable doubt, but as McAfee and his legal team mount a defense, here are some key lessons:
Report your income, and always file. You must file a tax return each year with the IRS if your income is over the requisite level. Don’t forget, and don’t be late either, even if you can’t pay what you owe. File anyway, and you can work out payments later. The statute of limitations on audit—usually three years and sometimes six years—can’t even begin to run until you file your return. So file, and remember, the U.S. taxes all income wherever you earn it.