The Internal Revenue Service is tasked with ensuring that all citizens and entities file their required tax returns and pay their fair share of taxes based on the current tax code. It also has the ability to investigate a variety of related tax crimes and to seek justice under the law for those who commit a crime. The most common tax crimes are associated with failing to file a return, knowingly falsifying a return and not paying taxes owed.
The IRS generally does not pursue legal action for a minor, one-time offense. If you are in the middle of a tax crime investigation, you may be facing serious legal consequences at the federal level. Both imprisonment and fines are possible punishments for a conviction of tax crimes. With this in mind, it is crucial that you have professional legal representation as early in the investigation process as possible.
Tax Fraud, Evasion and Avoidance
The current tax code provides taxpayers with a variety of options to legally reduce tax liability. For example, there are numerous permitted tax credits and deductions that you can take advantage of to reduce the amount owed each year. Tax avoidance is not a crime when it complies with the established tax code. Tax evasion and fraud, however, are illegal.
When you consider the differences between illegal fraud and legal avoidance, the primary differences lie in the legality of the activity and the intent. If you knowingly tried to avoid paying taxes by circumventing the tax code in some way, you may have committed tax fraud. If you simply made a computational error, this is not fraud because the act was unintentional. Some examples of tax fraud include failing to report cash payments, underreporting your income, falsifying records, falsifying business expenses and more.
Tax evasion occurs when you fail to pay taxes owed. This may coincide with failing to file a tax return. Some people file a return and fail to pay the full amount owed, and this can be considered tax evasion as well. Examples of evasion may be destroying records to conceal income, creating false invoices, keeping a second set of books and more.
Penalties for Federal Tax Crimes
The penalties for federal tax crimes vary based on the charges and the severity of the crime. If you fail to file a tax return, you may be punished by up to a year in prison and up to $100,000 in fines for every year in question. If you filed a return that was knowingly fraudulent, you could spend up to three years in prison and face up to $100,000 in fines. Concealing or misrepresenting financial information comes with a five-year sentence and a fine of up to $100,000. Whether you are facing these or other tax crime charges, your tax lawyer can build a solid defense on your behalf.
Defense Strategies for Federal Tax Crimes
If you are convicted of a tax crime, your life can be severely impacted by the punishments and other consequences. By hiring a federal defense lawyer with tax crime experience, you may be able to present a strong case in your defense. There are a variety of defense strategies that a seasoned lawyer may use.
For example, tax fraud involves intentionally filing an inaccurate tax return, but your attorney could argue that it was an innocent mistake rather than an intentional action. This same defense can be applied to tax evasion. Your attorney could show that you were unaware that certain actions were deceptive. Another common argument is stating that no taxes are actually owed. For example, if you failed to report income to the IRS, you may have also failed to report legitimate deductions, expenses and tax credits. Your attorney may show through these factors that you do not have a tax liability.
Request a Legal Consultation with a Tax Crimes Defense Attorney
Dealing with an IRS audit or investigation can be a stressful experience. Making a false move or statement at this stage in the criminal process may implicate you of a crime or may negate the ability to later use some defense strategies in your favor. Because of these factors, you should consult with a tax crimes defense attorney soon to discuss your situation. To schedule a consultation, call the law office today.
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