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Tax Fraud and Tax Evasion

Understanding the Risks

A tax crime is any offense that violates the Internal Revenue Code (IRC). The IRC, generally speaking, governs United States tax laws. Every year, the Internal Revenue Service (IRS) launches thousands of investigations against taxpayers. Because tax payment relies heavily on self-evaluation by taxpayers, the IRS is very aggressive in its pursuit of tax evasion and tax fraud convictions. Approximately half of these investigations end in criminal convictions.

More than 80% of the individuals convicted end up in prison and are sentenced to 44 months of confinement, on average. Tax crimes are serious offenses with serious penalties. If convicted of tax evasion, you may be sentenced to five years in a federal prison and have to pay a fine of $250,000; tax fraud is punishable by three years of incarceration and a $250,000 fine. If either of these offenses is committed by a business instead of an individual, the fine may be doubled.

What is Tax Fraud?

Tax fraud is a Title 26 violate of the IRC. There are a variety of ways that tax fraud may be committed; many times, this offense involves creating fraudulent returns, statements or other tax-related documents. In order to demonstrate that an individual has committed fraud, the IRS must be able to prove that a variety of elements are in place. For example, an individual is only guilty of tax fraud if he/she actually made a false return, statement or other tax document. Additionally, the document must contain a statement that it was made under penalty of perjury.

If you sign a faulty tax return under the impression that I was correct, you cannot be convicted of tax fraud. If the IRS cannot demonstrate that you signed the document with knowledge of the mistake, you are innocent of the offense. Finally, the IRS must be able to show that you made and singed the document willfully and intended to break the law. This element is called affirmative action. Without it, you have not committed a legitimate federal offense. In other words, if you simply made a mistake and did not intend to commit fraud, you cannot be convicted.

About Tax Evasion

Tax evasion is similar to tax fraud. Like tax fraud, it is a Title 26 offense and you must have willfully committed a federal crime in order to be considered guilty. Tax evasion can include any action that involves an attempt to avoid tax payment or defeat tax payment. Additionally, the IRS must show that you owe more taxes than you paid. Without additional taxes due, you cannot be convicted of tax evasion. Like fraud, evasion involves taking some form of affirmative action to avoid paying your taxes.

For example, an individual may try to secretly store a substantial amount of their funds in a confidential, offshore account. If a taxpayer does this with the intention of evading tax payment, the IRS may launch an investigation to determine whether or not a crime has been committed. Sometimes, employers evade paying taxes by deducting tax withholdings from their employees' paychecks but never remitting the money to the IRS.

Usually, employers take the money and put it towards personal expenses. Other employment tax evasion schemes involve paying employees with cash. With their financial transactions off the record, the employer may attempt to evade tax payment. If you are facing tax evasion allegations, talk to a lawyer from Okabe & Haushalter today. With a high-quality defense attorney on your side, you can have peace of mind know that your case is in reliable hands.

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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