In many tax audits done by the IRS, the agency is only interested in collecting taxes owed, interest, and penalties. The IRS can impose charge interest on all 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 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 check over your case and see whether it ought to be sent for criminal prosecution. Typically, this specialist has expertise and will seek guidance of the IRS’ tax fraud lawyer 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 expense of prosecution for each tax offense. When the criminal tax case is finished by the IRS criminal unit, it’ll be referred back to the IRS Examination Division in which the taxes are assessed. The IRS can add the civil tax fraud penalty in addition to the criminal tax fraud penalties. It’s important to understand that tax bills 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 is not tax fraud. The IRS looks for certain things when evaluating whether fraud occurred, such as: understatement of income, inadequate records, failure to file, concealing assets, dealing in cash, failure to make estimated cash payments, failure to cooperate with government, failure to make payments.
If you have one of these issues and are audited by the IRS, you might need a tax fraud lawyer. Actions you take during a tax audit can transform the usual tax audit into a tax fraud case. For example, lying or giving false answers to IRS investigators, delaying the analysis, or other actions to mislead IRS agents can indicate 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 can result from genuine mistakes in reporting tax information to the IRS. Tax offenses are some of the most frequent white collar offenses, which affects business professionals and ordinary Americans. Underreporting income, failing to file taxes, or overstating deductions are grounds for audits. If the IRS finds cause to further afield following someone falsifies their tax accounts – then the IRS will deeply explore.
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