Tax evasion is a very serious offense and is also referred to as tax fraud. It is never a good idea to try to avoid paying the taxes that you owe because you can find yourself convicted of a felony and in jail for up to five years. In addition, you could end up paying a fine of up to $250,000 as an individual taxpayer or $500,000 as a corporation. If you are found guilty of willful failure to file a tax return or pay the tax that is due, you could be facing a misdemeanor conviction that carries a prison sentence of up to one year. You could also be forced to pay fines totaling up to $100,000 as an individual and $200,000 as a corporation. According to reports from the IRS, about 17 percent of individual taxpayers fail to follow the tax code in one way or another. This is a fairly high percentage of the population that is susceptible for investigation for tax fraud.
There are many cases in which a taxpayer’s failure to obey the tax code is merely a mistake and not a willful violation. The IRS has well-tested programs to figure out which types of violations are genuine mistakes and the ones that merit criminal prosecution. You do not want to find yourself in the latter category because the government is fairly aggressive at investigating and prosecuting tax fraud. This is because the government wants to deter as many taxpayers as possible from being tempted to avoid reporting income or underpaying their taxes.
If you are engaged in overstating the number of exemptions or deductions that you are entitled to take, this could be a red flag for the IRS that you are trying to evade paying taxes. In addition, if you earn your income mostly in cash, this is another typical situation in which the IRS has found that taxpayers are tempted to go without reporting their income to the government. Tax fraud and evasion are investigated by the law enforcement department of the IRS, the IRS Criminal Investigation (CI).
Aside from getting together all of your documents, the first thing that you should do when faced with an investigation for tax evasion is to contact a licensed attorney. Yo should work with a tax evasion lawyer who regularly handles these types of cases and will be able to explain all the complexities to you of how the IRS works. The more information that you can discuss with your tax attorney, the better. You want to be fully informed of the process that the IRS will put you through and the potential pitfalls along the way. Whether you own a business or file taxes as an individual, the consequences of being convicted of tax evasion are severe. This can follow you around for the rest of your professional and personal life if not dealt with in a proactive way.
Do not be afraid of speaking with a tax evasion attorney to discuss your outcomes. Even if you think you will be convicted of tax evasion, it is better to have an experienced representative negotiating on your behalf with the IRS. Anything that you say to the IRS could be used against you, which is why it is preferable to streamline all of your communications through an attorney. Do not make the mistake of thinking that this problem will simply go away on its own no matter how badly you want it to. The sooner you get a plan in place to deal with your tax evasion charge, the quicker your life will get back to normal.
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