Investigations into tax fraud may lead to charges being brought at either the state or federal level, depending on the severity and amount allegedly in question. Should you find yourself under California or IRS investigation, it is important to know what laws and rights apply to your situation.
Not all tax evasion, fraud, or similar federal crimes are purposeful; mistakes can happen, identities can be stolen and used against innocent people and, in rarer cases, IRS workers could be complicit to tax fraud without the knowledge of the filer.
Here is what you should know, and do, if you are under investigation for tax fraud.
Evading vs. Avoiding
There is an obvious yet fine line between avoiding income taxes, and completely evading tax laws. One is actually legal under most circumstances, while the other is not.
Minimizing tax liability through legitimate deductions is commonplace. Not filing tax returns when the federal minimum is not met is also well within a U.S. citizen’s rights. These actions, along with filing extensions or payment plans, are all legal parts of the American tax system.
Evading tax liability by not filing returns, claiming residency in states where one does not reside, and making false claims or statements are methods used to evade taxes, which is both a California Penal Code and IRS crime.
Penalties for Tax Fraud
The mere act of providing false or fraudulent information on tax paperwork is punishable by imprisonment in CDC or the county jail for one year, along with fines at or less than $20,000, or in some cases both the fine and imprisonment will be assessed.
It becomes a federal charge in several scenarios. First, if the intention was to defraud the government of money, one could receive stiff fines and federal prison time. Secondly, an individual could face an array of wire fraud, embezzlement, and theft charges if he or she works in government and alters, defaces, or attempts to benefit from fraudulent tax documents.
Defenses to Tax Fraud
To prove tax fraud, state and federal prosecutors must furnish information that:
- The defendant knowingly and willingly provided false information to circumvent the IRS tax system;
- The statement or return was purposely false; and,
- The defendant knew the information they provided was false.
Providing accidentally incorrect information, without intentionally defrauding the government, is one defense a tax fraud attorney may raise. It is far more difficult to prove intent unless the defendant directly benefited from the false tax information.
Retain an Expert Tax Fraud Attorney
When freedom is on the line, and you are willing to prove the tax errors were innocent mistakes, an attorney must be retained for your protection. Consider superior representation an investment into your future freedom – one that you should not delay in making.
Cases that head to trial require planning. Investigating the tax return, looking over financial records, polling witnesses, and working toward amicably resolving (or dismissing) your case take time. Head into court without expert counsel, and most tax fraud cases will end unfavorably for innocent defendants.
Attorney James E. Blatt offers results-driven representation in tax fraud, evasion, and similar IRS crimes. Contact his office immediately to schedule a sit-down with one of California’s premier attorneys.