Tax evasion is a broad term that refers to intentionally underpaying or failing to pay taxes. In order for this type of charge to be leveled, there must be some evidence that the taxpayer deliberately chose actions that led the failure to pay or not paying the proper amount. Attempts to circumvent the payment of taxes can lead to serious consequences. Here is what taxpayers should know about tax evasion in Brooklyn and what can happen as a result.
Understanding Laws That Apply
State and Federal laws provide working definitions for determining if tax evasion has taken place. They also identify varying degrees of evasion that may take place. In some cases, those laws also overlap with laws related to tax fraud.
In the state of New York, the tax laws as defined in article 1800 provide the basis for determining if an attempt to evade paying taxes or commit fraud by failing to provide accurate information about income amounts and sources took place. Section 1801 repeatedly refers to willful actions that lead to the underpayment or lack of payment of taxes. This is key since state and government tax agencies typically do not hold that fraud or evasion has taken place if it appears that the taxpayer simply made a mistake and had no intent to defraud or evade the payment of taxes.
There are several actions identified as examples of evasion. One has to do with failing to file a tax return. In this scenario, it can be demonstrated that the taxpayer had no medical or other reason to not file the proper documents by the due date.
Another has to do with deliberately omitting to report all sources of income or revenue as required by law. Choosing to not include some source of taxable income in the return documentation could indicate a willful attempt to lower the tax obligation and result in paying a lower amount of taxes for the period cited.
Attempting to claim deductions of exemptions that the taxpayer is not entitled to receive is another way that some have tried to lower their tax obligations. When there is a clear pattern of claiming expenses that are not allowed, this could be grounds for launching an audit and determining if the errors were due to a lack of understanding the tax codes or a deliberate effort to evade paying the proper amount of taxes.
Who Can Be Charged With Tax Evasion?
Any individual or business entity can be charged with tax evasion. Along with the failure to report income, claiming exemptions that are not allowed, or choosing to not file documents in a timely manner, business owners could be charged because of a failure to withhold and ultimately report employee taxes.
Trust funds are also subject to taxation. It is the responsibility of trust administrators to ensure all income paid into or generated by the trust is reported to the appropriate tax agencies and any taxes owed paid by the due dates set by the state and federal agencies.
What are the Penalties for Tax Evasion?
Depending on the nature of the problems with the reporting and amounts paid, the charges can range from misdemeanors to felonies. For example, New York tax laws address the issue of what is known as tax fraud or evasion in the fifth degree. This typically has to do with an attempt to modify returns so that a lower obligation is reported but does not involve an extensive restructuring of information to achieve the desired result. Such an action would be considered a misdemeanor.
The taxpayer would like be charged with paying the remaining taxes owed, a penalty that is calculated based on the amount of money involved and the time lapsed since the original filing date, and any other late fees that could apply if some sort of repayment installment plan is used to settle the debt.
Tax evasion in the fourth, third, second, and first degree are considered felonies. Typically, charges that fall into any of these categories would involve a structured and ongoing process of altering financial documents in order to lower tax obligations.
Along with fees and other penalties based on the type of evasion that occurred, there is the possibility of one or more people facing incarceration. Depending on the nature of the offense, the convicted party could face anywhere from a couple of years to over a decade of time in a federal or state prison. The eligibility for parole may be present in some cases.
Keep in mind that the grounds and specifics related to tax evasion do change over time. Activities that were classed as misdemeanors may not be considered felonies. For this reason, it pays to be mindful of any recent changes to the tax codes and ensure those are taken into account when calculating, reporting, and paying taxes.
How Can a Lawyer Help?
When there is any indication something is wrong with tax forms or payments remitted, the first order of business is to hire a tax attorney. The goal is to have the forms and all communications with the tax agency evaluated. An attorney can reconstruct what took place and determine if there are grounds for presenting whatever omissions or mistakes that were made as being done without malice or an attempt to avoid paying the correct amount of taxes.
Being charged with any form of tax evasion can create financial issues for years to come. Securing legal representations ensures there is someone who understands tax laws, can relate them to the circumstances surrounding the allegation, and take whatever steps are necessary to ensure the rights of the client are observed at all times.
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