An individual or business that intentionally gives out false information in order to avoid paying taxes completely or reduce the amount that they owe has committed to tax fraud. Tax evasion is often referred to as tax fraud. However, there are numerous other ways that people can commit tax fraud, including the following.
Putting the Wrong Information on Your Tax Return
You will have to be cautious while you are doing your taxes. You have to make sure that everything you fill out on the application is correct. Many people use tax preparation software in order to do their taxes. This software is designed to help catch errors. However, it may not catch all of the errors that you make. That is why it is a good idea for you to consult with an accountant when you are doing your taxes.
Falsifying Your Records
If you are working with an accountant, then they will ask to see a copy of your records. They will also ask you to fill out a questionnaire. If you falsify any of this information, then you can be charged with tax fraud.
Under-Reporting Your Income
The amount of taxes that you have to pay is largely dependent on the amount of money that you make. That is why it is common for people to under-report their income in order to save money. Keep in mind that you are required to report all of the income that you make if it is over $600. This means that if you have made money doing side jobs, then you will have to report this income.
Underpaying Your Taxes on Purpose
Your accountant or the software that you use to do your taxes will tell you how much you have to pay. If you do not pay this amount, then you may be charged with tax fraud.
Why Is Tax Fraud A Problem?
There is a reason that tax fraud is often punished harshly. The government needs money in order to run. Most of this money comes from the money that people pay in taxes. When people do not pay their taxes, this costs the government millions of dollars every year.
Possible Penalties for Tax Fraud
There are civil and criminal penalties for tax fraud. If you are charged with a civil crime, then you will likely have to pay a fine. You can face prison time if you have a criminal charge.
Even if you only have one tax fraud charge, you can still face a lengthy prison sentence. In fact, it is possible for you to spend over five years in jail for tax fraud charge. The fines you are required to pay for tax fraud can be steep. People who are charged with tax fraud can be forced to pay up to $250,000. Businesses could be required to pay up to 500,000.
You may also be required to pay restitution. It is important to note that this is separate from the fines that you pay. You will have to pay restitution to the federal and state government.
Additionally, you may be put on probation. A probation sentence will typically last one to three years. If you do not comply with the terms of probation, then you will likely be put on probation longer. You may also have to pay a fine or spend time in prison.
Why You Need a Tax Fraud Attorney
Your tax problems can get you into a lot of trouble. That is why if you have received a notice from the IRS, then you will need to call an attorney as soon as possible. Your attorney can develop a defense strategy.
Possible Tax Fraud Defenses
There are several elements that have to be present in order for you to be convicted of tax fraud. The prosecution has to be able to prove that you intentionally engaged in fraudulent activity while doing your taxes. They also have to be able to prove that you were aware of the fact that you provided incorrect information. Possible tax fraud defenses include the following.
- You did not willfully commit fraud.
- There is not enough evidence to prove that any fraud occurred.
- You are not required to pay anything to the IRS.
Attorneys Can Resolve Serious Tax Problems
It is natural for you to feel nervous when you get a letter from the Internal Revenue Service. However, you can put your fears to aside when you hire an attorney. Your lawyer can help you resolve the tax problems that you have. The government has to be able to build a strong case. They will do everything that they can to punish you as harshly as possible.
Your attorney will let you know about the rights that you have. They will also make sure that you understand all of the laws.