Strategic Federal And State Criminal Defense

Tax season is a few months away: Ensure accuracy in your return

On Behalf of | Oct 31, 2017 | White Collar Crimes |

Nothing is for certain except for death and paying taxes. Or, at least that’s how the saying goes. For some people, having to pay taxes is an opportunity to try and get over on the government. Doing this is illegal.

Tax fraud is a serious matter that can land you in prison. It is important to note that there are differences between being negligent when you file your taxes and filing a fraudulent return.

Scope of the issue

You should take care to ensure that your income tax returns are accurate. It is estimated that around 17 percent of taxpayers don’t comply with the tax laws, but around 75 percent of the violators are individuals. A very small percentage, .0022 percent, of taxpayers in this country are convicted of tax fraud annually.

Typically, people who are self-employed and those who are in the service industry are most likely to commit tax fraud. One government study into the matter found that car dealers, lawyers, doctors, salespeople, accountants, hairdressers, and clothing and restaurant store owners were most likely to commit tax fraud. Some people, such as restaurant servers and handymen, commonly underreport their cash income.

Definition of tax fraud

A person or corporation commits tax fraud when they try to defraud the IRS or evade the tax laws. This must be a purposeful act, so unintentional errors aren’t considered tax fraud. Preparing and filing a false income tax return, failing to pay taxes due, making false claims, failing to report all income and not filing a tax return when one is required are all examples of tax fraud.

Typically, the IRS errs on the side of mistakes being made due to carelessness unless there are signs of fraud. In these cases, there aren’t likely going to be any criminal charges levied. Instead, the IRS will try to rectify the situation in other ways.

When a tax auditor determines that there was a negligent error made, the IRS might issue a penalty of up to 20 percent of the underpayment. If the auditor determines that there is an element of fraud, the case is turned over to the IRS Criminal Investigation branch.

Severe penalties

The penalties for tax fraud are serious. You can face a felony charge with up to five years in prison for trying to avoid paying income taxes. Providing false statements and fraud is a felony that carries up to three years in prison. Failing to file a return is a misdemeanor that can lead to up to a year in prison.

You must determine how to fight back against these federal charges. As you can imagine, going up against the IRS and federal government isn’t an easy tax.