Even though the IRS is one of the most feared agencies of the United States government, their demands are usually simple. They want the money. When a person is being investigated or audited by the IRS they often fear the potential for criminal prosecution.
In most cases, the IRS can be satisfied with a payment of the amount owed in taxes in addition to applicable penalties. (Applicable penalties shouldn’t exceed 75% of the tax amount owed, plus interest.) In other cases, the file may be referred by a Tax Fraud Referral Specialist to the IRS Criminal Investigation Division (CID) if tax crimes are suspected.
IRS Fraud & Tax Evasion Explained
There are different reasons why a person might be charged or indicted for tax fraud. Usually when a person is under investigation for another federal offense their tax records are an item of question. For example, a person suspected of drug trafficking, money laundering, or engagement in a criminal conspiracy may not be prosecuted for those crimes, but instead for Tax Evasion.
The strategy of using Tax Evasion to charge a person suspected of other crimes was first used by legendary FBI (formerly the Bureau of Prohibition) agent Elliot Ness.
Agent Ness managed to get charges to stick to the infamous Al Capone in an indirect fashion which led to a conviction. Although the United States was never able to convict Al Capone for his alleged involvement in a multi-million dollar bootlegging operation, they managed to get him found guilty of tax evasion instead.
What is Tax or IRS Fraud?
Tax fraud is any attempt to evade taxation. The list below should be considered as some of the actions that could be a progenitor of a tax related federal criminal case, or, at bare minimum, a tax audit.
- Filing False Tax Returns
- Evasion of Taxation
- Failure to File a Tax Return
- Filing False Documentation
- Failure to Collect Employment Taxes
- Failure to Pay Owed Taxes
- Understating Income
- Failure to Maintain Adequate Records
- Hiding Assets
- Refusing to Cooperate with Tax Agents & Authorities
- Operating a Cash Business
- Engaging in Illegal Activities or Attempting to Conceal Illegal Activities
Criminal Penalties for Tax Evasion & Tax Fraud
What’s the Penalty for Tax Evasion?
TITLE 26 USC § 7201. ATTEMPT TO EVADE OR DEFEAT TAX
Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.
You Might Be Innocent
In general, the IRS will not prosecute taxpayers who made a mistake on their taxes. Making a mistake on your tax filings is not a criminal offense.
There’s a fine line between making a mistake on tax filings and committing criminal tax fraud. If your case is on the desk of an overzealous IRS agent, that line may be blurred. Securing legal representation with experience fighting federal tax charges is the best recourse in these situations.
Think You’re Guilty?
If you’re guilty of Tax Fraud, contact The Law Offices of Tad Nelson & Associates immediately. Don’t pay the taxes as the action may be seen as an admission of guilt. Don’t rush to hire an accountant either because they’ll be subject to questioning by IRS agents. Our legal team can be instrumental in finding a Kovel accountant to assist us in our efforts to defend you. Kovel accountants are special accountants that are somewhat protected by attorney-client privilege due to their function as interpreters.
Experienced Legal Representation that Counts!
If you think you’re being audited, were charged with a criminal offense related to tax evasion, or if you think you’re being investigated by the Internal Revenue Service, contact The Law Offices of Tad Nelson & Associates immediately. We can help.
The phone number to our Houston law office is 281-280-0100.
The phone number to our Galveston office is 409-765-5614.
