In tax audits the agency is 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, if the IRS suspect you have 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.
Based on the degree of fraud involved, the IRS auditor may ask a tax fraud expert to look at your case and see whether it should be sent for criminal prosecution. Normally, this specialist has expertise and will seek guidance of the IRS’ tax fraud lawyer 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, in addition to the expense 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 in addition to the criminal tax fraud penalties. It’s important to understand 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, hiding assets, dealing in money, failure to make estimated cash payments, failure to cooperate with government, failure to make payments.
If you have one of these issues and are audited by the IRS, you might need a tax fraud attorney. Actions you take during a tax audit can transform a normal tax audit . For example, lying or giving false answers to IRS investigators, delaying the investigation, or other actions 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 strategy.
Is Tax Fraud a crime?
Tax fraud is a common charge which could result from genuine mistakes in reporting tax information to the IRS. Tax offenses are a few of the most frequent white collar crimes, which affects business professionals and ordinary Americans. Underreporting income, failing to file taxes, or overstating deductions are grounds for audits. If the IRS finds cause further afield following someone falsifies their tax report – then the IRS will heavily investigate.
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