Tax fraud is a crime that involves intentional wrongdoing when failing to comply with a tax law. If you simply make a mistake when filing your taxes, the IRS may charge you with civil penalties, but they will not pursue any criminal charges. If, however, the IRS believes that you intentionally failed to meet your obligations as a taxpayer, you could face criminal penalties and jail time.
Tax fraud can result in up to 5 years and prison and a $500,000 fine. The IRS does not commonly pursue criminal charges, so if they have singled you out for a criminal tax violation, you should immediately consult with a tax attorney.
What to Do If You Are Accused of Tax Fraud
The most important thing to consider when you are being investigated for tax fraud is what NOT to do. First, do not volunteer any information to the IRS.
This applies even if you have not yet been charged with tax fraud. A routine audit can turn into a criminal investigation if you lie to the IRS or hide information from them. If you say something that can be used as evidence of intent to commit tax fraud, that can be used to charge you with criminal penalties, including jail time.
Second, be careful of what you say to your accountant or tax preparer. They are professionals, and they may have previously helped you with tax issues, but communications with them are generally not privileged. This means that the IRS can require your accountant or tax preparer to testify against you.
If you give falsified records to the IRS or make false statements, you will most likely make your situation much worse. This is also true if you make incriminating statements to your CPA. Even if you are only being investigated for a routine tax error, talk to a tax attorney if you have any concerns about what the IRS might uncover.
Consult With a Criminal Tax Attorney
While there are some tax problems that taxpayers may be able to handle themselves, criminal tax fraud charges are not one of these cases. You personal freedom may be at stake, and you will want the best representation possible to negotiate with the IRS or fight your case. Communication between you and your attorney are subject to attorney-client privilege, which prevents the IRS from requiring your lawyer to testify against you.