In most tax audits done by the IRS, the agency is only interested in collecting taxes owed, interest, and with penalties. The IRS can impose charge interest on all of the above, and a negligence penalty, along with a late filing penalty. In a tax audit, even if the IRS suspect you have committed tax fraud, they could impose a civil tax fraud penalty. This penalty is typically equal to 75% of the tax you owe, plus interest on the penalty.
Depending on the level of fraud involved, the IRS auditor may request a tax fraud expert to look at your case and see whether it ought to be sent for criminal prosecution. Typically, this specialist has experience and will seek guidance of the IRS’ tax fraud lawyer for help if it looks 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 crime. Once the criminal tax case is completed by the IRS criminal unit, it will be referred back to the IRS Examination Division in which the taxes are assessed. The IRS can add the civil tax fraud penalty on top of the criminal tax fraud fines. It’s important to know that tax statements 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 isn’t tax fraud. The IRS looks for certain things when evaluating whether fraud occurred, such as: understatement of income, inadequate records, failure to file, hiding assets, dealing in cash, failure to make estimated cash payments, failure to cooperate with authorities, failure to make payments.
If you have one of these problems and are audited by the IRS, you might need a tax fraud lawyer. Actions you take during a tax audit can transform a normal 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 lawyers 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 could result from real mistakes in reporting tax information to the IRS. Tax offenses are some of the most ordinary white collar crimes, which affects business professionals and average 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 deeply explore.
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