How Do Federal Defense Attorneys Handle Criminal Tax Evasion Cases?
Federal tax evasion charges are serious white-collar criminal allegations often brought by federal prosecutors against individuals or corporations suspected of tax fraud. The Internal Revenue Service (IRS) is the primary federal agency that investigates alleged tax crimes under 26 U.S.C. § 7201, the federal statute which sets out the crime of tax evasion.
To prove a defendant guilty of tax evasion, the prosecution must establish several key elements:
- The defendant owed more federal income tax for the year than they declared on their return
- The defendant knew they owed more tax than they declared
- The defendant made a willful, affirmative attempt to evade or defeat paying that additional tax
Criminal tax evasion charges are complex cases that require an experienced federal criminal tax defense attorney to mount an effective defense. Here is an overview of how federal defense lawyers handle these cases:
The IRS has its own team of investigators and officers tasked with detecting and investigating allegations of federal tax fraud. These IRS investigators often work jointly with state tax authorities who conduct parallel investigations into potential state tax violations.
There are several ways tax evasion investigations get initiated:
- Referrals from third parties like ex-spouses or disgruntled employees
- IRS audits and reviews that detect under-reporting of income or overstating of deductions
- IRS investigators proactively targeting high wealth individuals or companies in certain industries prone to tax evasion
During the investigative stage, the IRS will gather evidence by:
- Issuing subpoenas for financial records
- Conducting interviews of targets and witnesses
- Executing search warrants on homes, offices, or electronic devices
Once the IRS believes it has sufficient evidence, it will refer the case to the Department of Justice (DOJ) for prosecution. DOJ tax attorneys will then present the evidence to a federal grand jury to seek an indictment on criminal tax evasion charges.
Role of the Defense Attorney
When representing a client under IRS investigation, the defense lawyer’s priority is to avoid criminal charges altogether. An experienced tax attorney will:
- Advise clients to exercise their 5th amendment right to remain silent during questioning
- Avoid handing over documents or evidence unless legally compelled
- Negotiate with IRS agents and DOJ lawyers to dissuade them from seeking an indictment
If charges cannot be avoided, the attorney will begin developing defense strategies and negotiating for a favorable plea agreement.
Once indicted, the next stage is pretrial litigation in federal court. The defense attorney’s role now shifts to:
- Filing motions to suppress evidence improperly obtained by the IRS
- Seeking dismissal of the indictment if it is legally deficient
- Negotiating a plea deal if conviction seems likely
- Preparing for trial by interviewing witnesses, hiring experts, and readying legal arguments
An experienced tax crime lawyer will exploit every opportunity to get charges reduced or dismissed pretrial. If the case goes to trial, the attorney must be ready to aggressively defend the client before a jury.
Conviction for criminal tax evasion under 26 U.S.C. § 7201 can result in:
- Up to 5 years in federal prison
- Fines up to $250,000 for individuals or $500,000 for corporations
- Paying the costs of prosecution
The defense lawyer’s role at sentencing is to advocate for minimized punishment. Strategies include:
- Highlighting mitigating factors about the defendant’s background and circumstances
- Presenting character witnesses to humanize the defendant
- Disputing the monetary amounts used to calculate sentencing guidelines
- Citing precedents showing sentences in similar cases
- Arguing for alternatives to imprisonment such as probation or home confinement
An experienced federal tax attorney knows how to craft persuasive arguments to limit jail time and financial penalties.
Facing criminal tax evasion charges puts defendants at risk of steep fines, years in prison, and financial ruin. Retaining an experienced federal tax defense attorney provides the best chance to avoid conviction or minimize penalties. The lawyer’s advocacy and guidance at every stage gives defendants their best shot at the most favorable outcome possible.