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’ve committed tax fraud, they can impose a civil tax fraud penalty. This penalty is typically equal to 75 percent of the tax you owe, plus interest on the penalty.
Depending on the degree of fraud involved, the IRS auditor may ask a tax fraud expert to look at your case and see if it ought to be sent for criminal prosecution. Normally, this specialist has experience and will seek advice of the IRS’ tax fraud attorney for help if it appears necessary.
The penalties for tax fraud are serious. 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 on top of the criminal tax fraud penalties. It’s important to understand that tax bills 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 money, failure to make estimated cash payments, failure to cooperate with authorities, failure to make payments.
If you 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 the usual tax audit into a tax fraud case. By way of instance, lying or giving false answers to IRS investigators, delaying the analysis, or other actions to mislead IRS agents can indicate 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 frequent charge which can result from genuine mistakes in reporting tax information to the IRS. Tax offenses are some of the most ordinary white collar crimes, which impacts business professionals and average Americans. 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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