New York Criminal Tax Fraud Defense Lawyers
According to information contained within the IRS’ Tax Crimes handbook, the provision dealing with criminal tax fraud, known as tax evasion when it is a criminal matter, “is a broad provision and carries the most severe penalty of the criminal tax offenses.” In fact, there are two ways an individual can commit criminal tax fraud. They can make willful attempts to avoid or defeat the assessment of the tax or they can make willful attempts to defeat the payment of the tax due and owing.
Because the penalties are so severe, if you are facing criminal tax evasion charges, it is never prudent to go it alone. Conviction under I.R.C. § 7201 can result in the imposition of a prison sentence of not more than 5 years, $250,000 in fines for individuals and $500,000 for corporations, liability for the costs of prosecution and liability for any other statutory penalties provided by law for each and every instance of criminal tax evasion.
What constitutes an evasion of tax assessment?
The more common variety of criminal tax evasion under I.R.C. § 7201 is due to evasion of the tax assessment. The most common means of accomplishing or attempting to accomplish this goal is by filing a false return. The false tax return may take excessive deductions to which the taxpayer was not entitled, it may have understated income, or neglect to include certain types of income such as work performed as a 1099 independent contractor. The tax reported on the return will therefore be understated. Willful understatement of one’s tax obligation can result in criminal tax evasion charges.
What is considered an evasion of tax payment?
It is not necessary for there to have been a formal tax assessment for the IRS to proceed with criminal charges, but the issue does arise more commonly arise after a tax liability has been established. Generally, for criminal tax charges to proceed on this theory there must have been some act to conceal money, assets or other things of value that could be used to satisfy the tax debt.
For both forms of the offense, the elements that must be proved are substantially similar. To be found guilty of tax evasion the prosecutor must be able to prove beyond a reasonable doubt:
- An attempt to evade or defeat the payment or assessment of a tax has been made.
- The tax was due and owing.
- The act to evade was willful.
Willful acts are those that involve the “voluntary, intentional violation of a known legal duty.” In instances where a person intentionally avoids learning about their tax obligations, willfulness can be inferred from their steps to ensure willful blindness.
A routine IRS audit can lead to tax fraud charges
One of the most pressing concerns you should have if you have been selected for an audit by the IRS is that the audit will turn into a civil matter or be referred to the IRS’ Criminal Investigation Division for criminal prosecution. In fact, most criminal tax investigations arise from civil audits where the well-meaning taxpayer may have inadvertently made false statements or cooperated in ways that may have arisen the suspicion of the civil examiner. In other instances the presence of badges of fraud may cause the examiner to refer the matter to the Criminal Investigations Division. Badges of fraud include:
- Excessive cash dealings
- Failing to file tax returns
- Acting in a rude or belligerent manner to IRS agents
- Underreporting income
- Destroying tax records
- Maintaining inadequate financial or tax records
- Claiming false or fabricated dependents
- Transferring money or assets to close relatives to avoid tax
If badges of fraud are present and your matter is referred for criminal investigation and prosecution, you chances are not great – the IRS typically convicts about 80% of those it files charges against. Thus, if you are facing a tax audit, it is often prudent to bring in an experienced tax attorney at the outset. He or she can help guide you through the process and reduce the chances that a mistake will lead to criminal prosecution and a federal prison sentence.
Rely on our experience when facing criminal tax fraud charges
If you are facing what the IRS describes as one of the most serious tax crimes, the stakes are too high to proceed pro se. An experienced tax fraud defense attorney can advocate on your behalf and can attempt to settle the matter through negotiate. Of course, if you wait until you are already facing criminal tax evasion charges, your options are likely to be more limited and the focus will then shift to mitigating the criminal consequences you face. Therefore, if you have tax fraud concerns or are facing a tax audit, contact the tax lawyers of Sullivan & Galleshaw today by calling (800) 730-0135. They can assess your situation and determine how you can mitigate your civil or criminal liability while coming back into tax compliance.