Tax Fraud Charges—Definition, Penalties, Defenses, and FAQs

They say the only certainties in life are death and taxes, right? While that may hold true, there are plenty of people who don’t see paying taxes as a necessity.

Most people pay taxes via their payroll check from employment and then fill out a tax return at the end of the year. Once the tax return is filed then you either owe the government some money or they owe you. Once that is decided then you write them a check in one lump sum or set up a payment plan if the amount is too much for you to handle at once. 

This is what most people do.

However, there are some who feel that they don’t need to pay taxes or want to find ways to avoid paying taxes.

In most cases, the IRS won’t come after you for failing to pay some taxes but if you continuously fail to pay or evade paying taxes, you can expect that the IRS will be looking into you. If the IRS comes after you for failing to pay taxes or evaded taxes, you can expect that you may not only end up in jail but be paying not only what you owe back but some extreme penalties and fines. The IRS can garnish your wages and even take your house to recover the debt from a form of tax fraud.

If you are facing any fraud charges, contact The Defenders. Our firm has the experience and knowledge to help you navigate through this stressful time. We will work with you to build a solid defense and protect your rights.

What Is Tax Fraud?

Tax evasion is a form of tax fraud where someone takes steps to avoid tax liability. 

There are several forms of tax evasion:

• Failing to file tax returns at all
• Not reporting the proper income 
• Paying employees with cash and not reporting it 
• Failing to withhold or pay payroll taxes 

Tax avoidance is a different form of tax fraud than tax evasion. Tax avoidance may sound like a crime but in reality it is perfectly legal. Tax avoidance involves taking steps to minimize the amount of taxes that a business or person might have to pay. 

This can involve using loopholes in the tax code to reduce high taxes. Another way to avoid paying higher taxes is to use every deduction and credit that is available to you including making larger contributions to pre tax accounts like IRA’s.

The IRS defines other types of tax fraud, each with its own definition and penalty, for example:

• Filing a fraudulent tax return 
• Willful refusal to collect taxes 
• Failure to file, supply information, or failure to pay taxes 
• Fraudulent claiming a withholding exemption 

There are many other forms of tax fraud including moving assets in order to prevent the IRS from determining the true amount of taxes owed; like moving money to offshore accounts and not reporting that money to the IRS. 

Filing tax returns that leave out income or claim deductions that you are not actually entitled to can be considered evasion of assessment because it prevents the IRS from determining the tax liability you really owe.

Taxpayers may avoid or evade making payment. 

This is considered a willful failure to pay taxes that are due.

The IRS is not responsible to determine the actual amount of the taxes that are due. It is also not necessary for the IRS to demand payment in order for someone to be charged with tax fraud or tax evasion crimes.

How To Avoid Tax Fraud Charges?

There are some things you can do before you face tax evasion charges. 

If you have failed to file a return for a particular year or underreported income you have an opportunity to repair it before your looking at a prison sentence.

1. File any returns that you haven’t even if they are late. It’s better to take a monetary penalty for filing late than face a prison sentence and fines
2. If you underreported your income, you have a chance to amend the return in question to show the income you didn’t report. Again, you may be looking at a monetary penalty.
3. Negotiate with the IRS. After all your returns are filed and returns amended, you have the opportunity to negotiate with the IRS on a reduction of fees or even the amount owed. You can also negotiate a payment plan so you can afford to pay over time. Note that payment plans involve more fees and penalties, but it is an option.

What Are The Defenses Against Tax Fraud Charges

Tax fraud or evasion is a crime of intent or willfulness. 

The IRS must prove three elements beyond a reasonable doubt.

1. That you owed the tax 
2. That you acted willfully 
3. You made an affirmative act of evasion 

Since these three elements must be proved it is a good defense strategy to use evidence to disprove any of the three elements. 

Your defense team can use evidence to disprove that you made an affirmative act of evasion. 

For instance, if an accountant filed your tax returns on your behalf and you believed everything was in order, the IRS could later claim that you failed to file or underreported your income. Since you didn’t personally file the returns, you may not be held liable in such a scenario. Instead, the accountant could be held responsible, particularly if they intentionally misrepresented your returns.

Having evidence deemed inadmissible is also a way to defend against tax evasion or fraud charges. 

If evidence was obtained with a search warrant and the police searched and retrieved evidence from a space they were not supposed to be in then the evidence that was seized can be deemed inadmissible, therefore leaving the prosecution without enough evidence to prosecute your case.

Hiring an experienced tax lawyer who can create a strategic defense against tax fraud can help get charges reduced or even dismissed.

What Are The Penalties For Tax Fraud

Depending on the severity and nature of the crime, the IRS can assess different levels and variations of penalties for tax fraud.

For example, filing a fraudulent return can carry a fine of up to $100,000 and or three years in prison.

More severe acts can lead to harsher penalties like five years in prison and $100,000 in fines.

Simply failing to file a return is a misdemeanor and typically carries monetary penalties instead of criminal charges. 

Failure to disclose offshore accounts can result in fines of 50% of the offshore account balance, or $124,000 per violation whatever is greater.

Tax fraud of any kind is a serious offense and based on the offense will determine the penalty. It is in your best interest to contact a lawyer who is familiar with these types of cases. Having a lawyer who can help understand the charges and what your options are can make all the difference.

Facing Tax Fraud? The Defenders Can Help

Tax law is notoriously complex, making the annual task of filing taxes challenging enough—let alone dealing with the prospect of facing tax fraud charges.

Let Nevada’s premier defense team help you navigate any charges you may face for tax fraud. 

Call today to speak with an attorney and get a case evaluation. 

Our experienced team understands tax law and the challenges you may be facing. With years of successfully defending clients, we are committed to providing dedicated support for your case.

We have the resources to defend your case aggressively against tax fraud charges. Contact us today to discuss your case for free.

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