You may have received notice from the IRS or state entity that you are being persecuted for a tax crime.
The first response to any notice of an intent to prosecute should be to contact a criminal tax defense lawyer. Tax Fraud or other taxes offenses are serious matters and can affect you financially for many years and could potentially include the loss of your freedom.
Depending on the details and nature of offense you are being accused of, Tax fraud and evasion offenses can carry severe penalties including prison time. If you’ve been notified of intent to prosecute, it means that the IRS is claiming you have knowingly committed a tax crime by failing to file your taxes, or by providing false information on your tax return. But failure to file taxes or file them properly is not the only offenses that can be prosecuted under tax law.
Laws differ slightly as do penalties and sentencing guidelines state by state. In the State of New York, for example, it is not usually the IRS who attempts to prosecute tax crimes but the Department of Taxation and Finance.
The following three reasons are absolute reasons to contact a criminal tax defense lawyer:
If you owe $10,000 or more in back taxes. Once you owe $10,000 the IRS can file tax liens and tax levies on your property.
Pending a State audit by the IRS you discover things in your return which you cannot definitively explain or issues you don’t know how to handle.
You have been notified by state or federal authorities of their intent to prosecute for a tax offense(s)
What Are Tax Crimes?
Tax crimes can be prosecuted on both the federal and state levels and various offenses are prosecutable under tax crime law such as business income tax, personal income tax, property tax, sales tax and even cigarette tax. Although the most commonly prosecuted tax crimes are Willful Failure To File A Tax Return, there are many other offenses which can be prosecuted as tax fraud crimes. In the State of New York, there are as many as eight categories of tax crimes.
Here is a brief explanation of each:
Tax Law §§ 1801(a)(1): willful failure to file a return or other required document
Tax Law §§ 1801(a)(2),(3): knowingly making or filing a false return or report or supplying false information
Tax Law §1801(a)(2): willfully, knowing a return, report, or other documents under that chapter contains false or fraudulent information or omits any material information.
Tax Law §1801(a)(3): knowingly giving false or fraudulent information in connection with any return, audit, investigation, or proceeding or fails to provide information within the time required by law or regulations.
Tax Law § 1801(a)(4): willfully engaging in a scheme to defraud the State
Tax Law §1801(a)(4) supplements §§1801(a)(2) and (a)(3): ascribing tax fraud status to acts which do not involve filing a false document or making a false claim to the authorities that involve elements of fraud and scienter. §1801(a)(4) provides that any person, not only a taxpayer, commits fraud when he knowingly engages in any scheme to defraud the state or a political subdivision.
Tax Law §§ 1801(a)(5): willfully failing to remit taxes collected on behalf of the State
Tax Law §§ 1801(a)(6): willfully failing to collect sales, excise or withholding tax that is required to be collected.
Tax Law §§ 1801(a)(7): willfully and with an intent to evade any tax, failing to pay a tax due
Tax Law §§ 1801(a)(8): issuing False Exemption Certificates
Tax Crime Class and Penalties
In order to successfully prosecute a tax fraud crime, there are three elements which must be present and proof that a person has committed tax fraud.
1) The defendant must have acted willfully, knowing they were committing an illegal act.
2) The defendant not only knew he was committing an illegal act but acted against the State by defrauding the state with the intent to do so.
3) The monetary threshold for a certain felony class has been met.
Classes of Tax Fraud Crime
There are four felony classes for tax fraud crimes. There are “thresholds” that determine which class of felony your crime will fall under with equivalents. Tax crime felonies follow the non-tax crime felony classes:
Class B Felony $1,000,000
Class C Felony $50,000
Class D Felony $10,000
Class E Felony $3,000
The felony class is based on the monetary amount of your fraud. For example, if you are charged with failing to pay $50,000 in Sales tax to the State you are charged with a Class C Felony. Even if a tax crime fails to reach the minimum threshold of $3,000 it could still be prosecuted as a felony. Only a tax crime defense lawyer would know the details of a case after applying the law and know the exact penalties and outcome of a particular case
Defense of Tax Fraud Crimes
It is not common to be arrested for a tax fraud crime without already knowing you are being investigated by federal or state authorities. You will usually be served notice of investigation or attempt to prosecute.
If you are aware you are being investigated or that there is an attempt to prosecute you, a criminal defense lawyer should be contacted immediately. In some cases, mistakes are discovered and amounts of liability differ from the charge. It happens more frequently than the public realizes.
An attorney can have investigators working early to find out if this is the case. They can have the total amount of your fraud liability reduced if they are informed in a timely manner of all the evidence. A criminal tax attorney can negotiate an administrative outcome on your behalf, meaning that you would be placed on a structured payment schedule and never see prosecution.
There are many more defenses which can be used, however, each case is unique with varied elements and facts. The charges are serious and can affect every aspect of your life. If you have been charged with any tax fraud crime, contact a tax fraud criminal defense lawyer as soon as is possible. It could mean the difference between a quick relief or months, even years, of stress and financial hardship.
Find Law. (2017). New York Consolidated Laws, Tax Law – TAX § 1801. Tax fraud acts. [online] Available at: http://codes.findlaw.com/ny/tax-law/tax-sect-1801.html.
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