In many tax audits done by the IRS, the agency is only interested in collecting taxes owed, interest, 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, even if the IRS suspect you have 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 involved, the IRS auditor may ask a tax fraud expert to look at your case and see if it should be sent for criminal prosecution. Normally, this specialist has expertise and will seek guidance of the IRS’ tax fraud attorney for help if it appears necessary.
The penalties for tax fraud are serious. You could get up to 5 years in jail, plus fines of $500,000, plus the cost of prosecution for each tax offense. Once the criminal tax case is finished by the IRS criminal unit, it will be referred back to the IRS Examination Division in which the taxes are assessed. The IRS may add the civil tax fraud penalty on top of the criminal tax fraud fines. It’s important to know that tax bills from civil or criminal tax fraud cannot 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 have to have an intentional violation. Mere carelessness is not 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.
If you have any of these problems and are audited by the IRS, you might need a tax fraud attorney. Actions you take during a tax audit can transform the usual tax audit into a tax fraud case. By way of example, 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 plan.
Is Tax Fraud a crime?
Tax fraud is a frequent charge which could result from real mistakes in reporting tax information to the IRS. Tax offenses are a few of the most ordinary white collar offenses, which impacts business professionals and ordinary Americans. Underreporting income, failing to file taxes, or overstating deductions are grounds for audits. If the IRS finds cause to prosecute after someone falsifies their tax report – then the IRS will heavily investigate.
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