Tax evasion fraud is a white collar crime that can carry serious consequences. In Suffolk County, New York and the rest of the United States, tax laws are included in Title 26 of the US Code. Both individuals and businesses are obligated to understand all of the tax laws imposed by the Internal Revenue Service so that they can pay their taxes in a timely manner and pay the right amount as well. Too often, confusion can lead to underpayments and underreporting.
However, sometimes, a person or business will deliberately not file taxes or falsely claim something on their taxes to receive money that they are not rightfully or legally due. This would fall under the crime of tax evasion fraud.
What are the Most Common Tax Fraud Offenses in Suffolk County, New York?
The Internal Revenue Code is very complex, so it is easy for people to make mistakes when they claim tax credits. However, when someone is committing tax fraud, they claim credits that are not rightfully theirs. People will do that or deliberately underreport or not report income or hide assets. Some of the most common types of tax fraud offenses are as follows:
• Tax Refund Fraud: This is the type of criminal offense that involves a person filling out a tax form with inaccurate information or information that was stolen from another person to request a refund from the IRS.
• Tax Evasion: Tax evasion is a crime in which the individual or business deliberately avoids paying taxes to the government. It involves avoiding reporting taxes or filing false or fraudulent documents to report to the IRS. Unreported money in a tax form can count as evasion if it was willfully withheld. Tax evasion is one of the most complicated tax related crimes because it can include more than simply not reporting income. In some cases, the individual or business may commit the crime by stashing their money in foreign banks.
• Child Tax Credit Fraud: Child tax credit, also known as earned income tax credit or EITC, is a type of tax fraud that can be committed if a person claims a child on their taxes fraudulently. The child tax credit allows a person to reduce their taxes by $1,000 per qualifying child. In order to claim a child on one’s taxes, the child has to be under the age of 17, must be a dependent, must not have provided half of financial support and has to meet other criteria as set forth by the Internal Revenue Service. This type of tax fraud can occur when a married couple splits their qualifying children and both file as head of the household so that they can benefit from the child tax credit. This type of fraud can also occur between separated or divorced parents as well.
• Tax Preparer Fraud: This type of tax crime involves claiming improper deductions on a tax form, claiming false business losses, claiming fraudulent credits or excessive exemptions on tax forms. If the person preparing the taxes deliberately files a false return, that individual can be charged with tax fraud. Although taxpayers usually keep the money from false returns, the tax preparer may charge higher fees because of their fraudulent actions. In that situation, the preparer could face a lengthy time in jail and the person filing their taxes can face minimal penalties or none at all.
• Corporate or Business Tax Fraud: This type of tax fraud occurs when a business overstates its deductions, hides income, fails to report income from a stock exchange, claims false deductions and inflates losses. A business that commits fraud faces larger fines than individuals who do so and tax preparers often intentionally help the company commit the fraud.
• Employer Tax Fraud: Companies paying employees with cash, filing false payroll tax returns and withholding taxes from employees but not paying them to the IRS are included in this type of fraud.
• Family Tax Relief Credit Fraud: Claiming more children than you have as dependents is an example of this type of tax fraud. In other words, if someone has one child but claims two on their taxes, that is an example of the crime.
• Sales Tax Fraud: Businesses in New York who are registered as vendors are required to obtain a Certificate of Authority from the New York State Department of Taxation and Finance. Not reporting or paying sales taxes can result in criminal and civil charges and penalties.
• Property Tax Fraud: This crime occurs when someone deliberately files taxes on a property in a fraudulent manner to claim deductions or reduce tax liability.
What are the Penalties for Tax Evasion Fraud in New York?
This type of crime is typically prosecuted at the federal level. The prosecutor must prove that the evasion was deliberately and willfully committed and didn’t occur by accident. Generally, the point of recovery in tax evasion involves getting back the money that is owed to the government and sending it to the IRS. However, the individual who commits evasion can face up to five years in prison and receive a fine of up to $100,000. The sentence depends on other factors, such as the amount of money and people involved. For instance, if an entire corporation was involved, the fine can be as high as $500,000.
Defenses for Tax Evasion
A criminal defense attorney can argue a number of defenses in this type of case. Some of the most common include:
• Lack of Intent: The attorney can try to prove that the individual did not intend to evade their taxes.
• Mistakes: This is when it is argued that a mistake was simply made in the tax form.
• Insufficient Evidence: Arguing there isn’t enough evidence, such as taxes weren’t filed because the defendant forgot, is a common defense.
• Challenging the IRS: This often involves proving that the IRS made a mistake in claiming the right documents or amount of tax was not filed.
If you have been arrested for tax evasion fraud, you need a skilled Suffolk County tax evasion fraud lawyer. Contact the Spodek Law Group immediately to speak with an attorney about your case.