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Tax Fraud & Tax Evasion Lawyer

Everyone tries to save their hard-earned money and avoid taxes. And according to the Internal Revenue Manual, it is legal to avoid, minimize, and reduce paying income taxes. However, there are various federal and state rules at play. Knowing the difference between evasion and avoidance is necessary. But if you have not been paying taxes over the years, you are likely to get a notice from the Internal Revenue Service (IRS). If proven guilty, tax fraud and evasion crimes can burn deep holes in your pocket and you may even end up in jail. If you have received a notice from the IRS or suspect receiving one, you should immediately contact a tax evasion attorney. Having an attorney by your side is the best way to deal with federal and state tax departments.

What Is Tax Fraud or Evasion?

Tax evasion or tax fraud is defined as the use of illegal means or ways to avoid paying taxes. These acts are characterized by the willful and intentional use of illegal ways to avoid paying taxes. Generally, tax fraud and evasion involves misrepresentation of income or other financial factors that enable a corporation or individual to get deductions or completely avoid paying taxes. Tax evasion is an offense that is punishable in both civil and criminal courts.

What Is Considered to Be a Tax Fraud?

Deliberate Avoidance of Paying Income Taxes

While many citizens often fail to comply with tax rules or codes, it is not considered to be tax fraud or evasion. Because tax laws are dense and often incomprehensible by a layman, the IRS recognizes honest mistakes and terms these faults as tax negligence. This is the reason why IRS aims to collect the taxes it is owed in most audits. However, if during an audit, the IRS comes across proof that there a company or an individual deliberately tried to defraud the government agency, then it can impose civil and criminal actions against them. An individual or corporation are considered to be deliberately avoiding paying taxes if they intentionally take any of the following actions:

  • Willfully fail to pay the taxes owed.
  • Deliberately avoid filing income tax return
  • Do not disclose their income
  • Overstate deductions by making fraudulent claims

Unreasonable Tax Claims

Although the US federal tax system relies on the principle of “voluntary compliance”, it does not allow people to not pay taxes. So you may try and counter the IRS by making the claim that the system itself gives you the legal authority to avoid paying taxes, you are calling for trouble. Other frivolous arguments such as paying taxes are illegal and violate numerous US constitutional amendments will also get you in trouble. The US constitution gives you the authority to argue about the system but not the right to refuse to pay income taxes. If you file a claim making such arguments you are likely to end up with a notice from the IRS and tried under civil or criminal law. It is advisable to not fall for books or articles propagating or promoting such claims.

Living Out of the Company

The term is used to identify a situation wherein business owners masks personal income expenses as their company’s operational capital. Such actions are illegal and are one of the most common types of tax fraud prosecuted by the IRS.

Employment Tax Fraud

This type of tax fraud is committed by corporations or employers. The actions categorized as employment tax frauds are:

  • Underreporting workforce
  • Collecting payroll taxes from employees but not transferring the collected amount to the IRS
  • Paying employees in cash with no record of the payments

Refund Fraud

Overstating deductions, business expenses, and using fake exemptions to obtaining is known as refund fraud. This is a common method employed by people to avoid tax litigation and obtain maximum refunds even though they do not qualify for it.

Employee Leasing

Another employment tax fraud is employee leasing. In this type of fraud, the employer leases or outsources their workforce and their payroll responsibilities. When employees are outsourced, the company they are outsourced to has the responsibility of paying employees and collecting taxes from them. Often these companies collect employment taxes, fold-up their business, and disappear leaving a tax liability.

Tax Evasion Penalties

Because tax fraud and evasion fall under the purview of both civil and criminal law, an offender can be imposed with monetary fines, jail time, or a combination of both. Tax evasion and fraud is a felony crime and attracts the most stringent of punishments from the law enforcement.

The monetary fine imposed on the offender depends on the severity of the crime. Typically, a tax evader can be charged a fine of anywhere between US$ 10,000 to US$ 250,000. The amount is calculated by levying interest on 75% of the tax owed by the offender. For corporations, the fine can be as much as US$ 500,000. Depending on the severity of the tax fraud, the offender can be sentenced to one to five years in federal prison. The time an offender spends in jail will depend on the amount of money they hid and the nature of their case. Besides paying fines and spending time in prison, the offender is also liable for paying court fees, filing taxes, and paying the money they owe to the IRS.

Why Should You Hire a Tax Fraud Attorney?

Hiring a tax evasion defense attorney will benefit you in the following ways:

  • Tax laws can be indecipherable even for accountants. Therefore, it is always beneficial to hire a tax evasion attorney to handle your case against the IRS.
  • The Internal Revenue Service has the resources, experience, and expertise required to build a case against someone they are prosecuting. Going without an expert tax evasion attorney can leave you with fines and prison sentence.
  • Tax fraud attorneys understand the practices that are deemed illegal and know the defenses that can be presented in a case to lower the penalties or exempt you from being punished completely.
  • Tax fraud lawyers know what evidence can be presented and used to build your case in court. Without a tax evasion attorney, you will find it difficult to build a strong case for yourself.
  • If you are undergoing an audit or expecting to be audited, an expert tax fraud defense attorney will ensure the legality of the procedure and protect you from unlawful IRS agent conduct that can otherwise result in the department filing tax litigation against you.
  • A tax fraud attorney will ensure you do not cave in to intimidation and fear. The lawyer will represent you in court and defend you against the charges levied by the IRS with your best interests in mind.

Have you received a notification of a tax audit or been served a notice by the IRS? We can help you stand your ground and protect yourself from stringent punishments. Fill in the form provided alongside and we will help you find the best tax fraud defense lawyer near you.