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, along with a late filing penalty, and charge interest on all of 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 level of fraud involved, the IRS auditor may ask a tax fraud specialist to look at your case and see whether it should be sent for criminal prosecution. Typically, this specialist has expertise and will seek guidance of the IRS’ tax fraud attorney 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 cost of prosecution for each tax crime. Once 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 know that tax statements 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 evaluating whether fraud occurred, for example: understatement of income, inadequate records, failure to file, concealing assets, dealing in money, failure to make estimated cash payments, failure to cooperate with government, failure to make payments.
For those who have any of these problems 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 into a tax fraud case. For instance, lying or giving false answers to IRS investigators, delaying the investigation, 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 common charge which can result from genuine mistakes in reporting tax information to the IRS. Tax offenses are a few of the most frequent white collar offenses, 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 accounts – then the IRS will deeply explore.
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