In many tax audits done by the IRS, the agency is interested in collecting taxes and with penalties. The IRS can impose a negligence penalty, in addition to a late filing penalty, and charge interest on all the above. In a tax audit, if the IRS suspect you’ve committed tax fraud, they can impose a civil tax fraud penalty. This penalty is typically equal to 75% of the tax you owe, plus interest on the penalty.
Based on the level of fraud the IRS auditor may ask a tax fraud expert to look over your case and see whether it should be sent for prosecution. Typically, this specialist has expertise and will seek guidance of the IRS’ tax fraud attorney for help if it looks necessary.
The penalties for tax fraud are severe. You could get up to five years in jail, plus fines of $500,000, plus the cost of prosecution for each tax offense. When the criminal tax case is finished by the IRS criminal unit, it’ll be referred back to the IRS Examination Division where the taxes are assessed. The IRS can add the civil tax fraud penalty in addition to the criminal tax fraud fines. It’s important to understand that tax statements from civil or criminal tax fraud can’t be discharged through bankruptcy. The civil fraud penalty is dischargeable in a Chapter 7 bankruptcy.
Tax fraud is defined as intentional wrongdoing. To be accused of tax fraud, you must have an intentional violation. Mere carelessness isn’t tax fraud. The IRS looks for certain things when assessing whether fraud occurred, such as: understatement of income, inadequate records, failure to file, concealing assets, dealing in cash, failure to make estimated cash payments, failure to cooperate with authorities, failure to make payments.
For those who have any of these issues and are audited by the IRS, you may need a tax fraud lawyer. Actions you take during a tax audit can transform a tax audit that is normal into a tax fraud case. By way of instance, lying or giving false answers to IRS investigators, delaying the investigation, or other activities to mislead IRS agents can indicate tax fraud.
Experienced tax fraud attorneys can help you navigate an IRS tax audit, and help you formulate a strategy.
Is Tax Fraud a crime?
Tax fraud is a common charge which can result from real mistakes in reporting tax information to the IRS. Tax offenses are some of the white collar crimes, which affects Americans and business professionals. Underreporting income, failing to file taxes, or overstating deductions are grounds for audits. If the IRS finds cause further prosecute after someone falsifies their tax report – then the IRS will deeply explore.
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