Articles Posted in Tax Fraud

How the IRS Initiates Criminal Tax Investigations
What seemed like a minor transgression when filing your tax return could end up being a tax crime punishable by years in prison. The IRS Criminal Investigation Division (CI) pursues about 3,000 criminal prosecutions per year to provide a deterrent effect to all taxpayers. If you have been chosen as one of the taxpayers to be “made an example of”, you could face severe fines or time in jail in the name of increasing tax compliance by other taxpayers.

The criminal investigation process often begins when an auditor or collection agent detects possible tax fraud. The IRS can also be “tipped off” by the public—anyone can submit a 3949-A Information Referral form to the IRS that reports suspected tax law violations. Other law enforcement agencies can also reported suspicious activity to the IRS.

Special agents may then begin a preliminary investigation. A supervisor will evaluate the information to determine if further investigation is warranted. At least two layers of CI management must review the information before a criminal investigation can proceed.

What Is an Abusive Tax Shelter
An abusive tax shelter is an investment scheme that attempts to reduce income tax without serving any other economic purpose. The value of income or assets is not changed, so the sole purpose of an abusive tax shelter is to avoid tax.

The IRS attempts to deter participations in abusive tax shelters through tax audits, summons enforcement, litigation and other methods. There is also an abusive tax shelter hotline, where anyone can anonymously provide information about abusive tax shelter transactions.

Analyzing an Abusive Tax Shelter

What to Do If You Are Accused of Tax Fraud
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

How to Fight Tax Fraud Penalties
Tax fraud occurs when an individual’s conduct goes beyond negligence and becomes intentional or willful wrongdoing. It has been described as an intentional violation of a known legal duty.

If you want to fight tax fraud penalties, you will have to convince the IRS that they have insufficient evidence to prove that your acts were willful. You may be able to fight the charges against you, or negotiate the amount of penalties owed, but you must consult with a criminal tax attorney before saying anything to the IRS.

Badges of Tax Fraud

What Are the Potential Penalties for IRS Tax Fraud
The idea of being sent to prison for making a mistake on your tax return may seem ridiculous — and also scary — to the average taxpayer. With so many regulations to follow that even IRS employees can become confused, how can a lay person with no tax expertise be charged criminally for messing up their taxes?

Actually, they cannot be charged criminally if an honest mistake was made. While tax fraud can results in both civil and criminal penalties, there is a higher standard of proof for criminal charges. The IRS must prove criminal tax fraud “beyond a reasonable doubt”, whereas a civl tax fraud penalty can be imposed if there is “clear and convincing evidence”.

The IRS Must Prove You Intended to Commit Tax Fraud

The Most Common Criminal Tax Violations
The IRS reported 2,672 convictions for criminal tax violations in the 2016 fiscal year. While criminal tax charges are not common, the penalties —which can include jail time — are severe enough to cause any taxpayer to be concerned.

Most criminal tax penalties can result in a five-year prison sentence and $100,000 fine. You can also be charged with civil penalties for the same violations, and you may have any professional licenses revoked.

Common Criminal Tax Violations

What Are the Penalties for Failing to File IRS Tax Returns
Timely filing of IRS tax returns is always preferable to missing deadlines and facing tax return penalties for doing so. Failing to file tax returns leaves you liable for some potentially expensive penalties. Depending on how late, the amount of taxes involved and how many years of returns are delinquent, the consequences can be quite severe.

Here is a look at the penalties for failing to file tax returns:

  • Failure-to-file penalties begin after the April 15 deadline and accrue at a rate of 5% of the amount owed, per month or part of a month up to a maximum of 25%.

Can I Go to Jail for Failure to File Tax Returns
Failure to file tax returns can be classified as tax fraud by the IRS. While that term does manage to make it sound much more serious, failure to file by itself doesn’t often result in jail time.  Still it’s not impossible—just ask Wesley Snipes! Usually though, the government wants taxpayers earning money so it can collect those taxes. Sending non-payers to prison isn’t going to facilitate that.

The federal or California state government would have to be convinced that your failure to file taxes was intentional before considering something as severe as a jail term. Failure to file over many years, coupled with other bad conduct such as hiding assets, for example, could be subject to criminal penalties including imprisonment and/or fines. In lesser cases, you are more likely going to be liable for back taxes and civil penalties, plus interest.

Failure to File Tax Returns and Failure to Pay

Audit Character Meaning Validation Auditor Or Scrutiny
The U.S. Tax Code is, essentially, in a constant state of flux. While there are certain bedrock principles, such as the obligation to file and pay taxes, particularities regarding both substantive and procedural handling of tax issues can change with time. Decisions made by judges, changes to the Internal Revenue Code by acts of Congress, and IRS interpretations of the statutory law can all effect how the Code is administered. In some cases, some of these sources of guidance for the tax code may disagree resulting in uncertainty and confusion.

Taxpayers must remain aware of their ever-changing tax obligations and the consequences for their noncompliance. Taxpayers who fail to keep abreast of important changes in the tax code and its procedures risk subjecting themselves to significant tax penalties or even criminal tax charges.

How Long Does the IRS Typically Have to Conduct a Tax Audit?

Handcuffs arrests dollar currency crime human hand
As many tax controversy attorneys can state, tax problems can lead to major issues including a tax audit and even criminal tax charges. Even though tax problems are typically serious matters there are certain tax crimes that stand out even among serious offenses. Tax Evasion and tax fraud involving the use of stolen identities and stolen personal information is not only one of those crimes that can be punished particularly severely, it is also a major enforcement focus for both the Department Of Justice and the IRS. Taxpayers facing tax fraud or tax evasion charges should consult a tax lawyer before admitting anything to federal agents or prior to taking any action on the tax problem.

Queen of Tax Fraud Likely to Spend Decades in Prison

In a widely-reported tax conviction, Rashia Wilson was sentenced to more than two decades in prison due to her part in an identity theft and tax fraud scheme. While tax sentences are often harsh, this sentence stood apart in severity perhaps due to her other weapons charges, and her apparent propensity to brag and challenge law enforcement officials over social media. In one online posting, Ms. Wilson wrote:

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