There are many ways in which Americans can lower their local, state and federal tax burden. With deductions and credits, it may be possible to get a refund of $1,000 or more each year. However, taxpayers are expected to operate within the confines of the law when submitting tax returns or taking other actions to collect from the government. If you have committed tax fraud, you could face serious penalties, and it may be a good idea to consult with an attorney today.
What Are the Penalties for Tax Fraud?
If you are convicted of tax fraud, penalties range from jail time, prison time or a fine. In some cases, you could face jail or prison time and a fine. You may also be forbidden from working as a tax attorney, a tax preparation expert or as a CPA.
IRS guidelines propose a five-year prison sentence for those who attempt to evade paying taxes or who fail to collect taxes from others as required. This is in addition to a fine of up to $250,000 for individual taxpayers. Tax evasion is different from tax avoidance as tax avoidance involves using legal measures to lower a tax bill. Tax evasion occurs when an individual fails to pay what he or she legally owes after deductions and credits are taken.
The government also imposes penalties on those who fail to file a tax return. IRS guidelines suggest a one-year prison sentence in addition to a $100,000 fine for individuals. Individuals who make false statements on a tax return or who help others make false statements could be imprisoned for up to three years.
How Does an Attorney Help Those Accused of Tax Fraud?
Just because the government has accused you of tax fraud doesn’t mean that you are guilty of the charge. An attorney will take several different steps to show that you either told the truth or believed that you told the truth on all documents submitted to the government or any statements made to government officials.
In some cases, your attorney will attempt to show that you committed negligence as opposed to actual tax evasion. For example, if you fail to account for investment income in the past year because you didn’t get proper documentation from your broker, that may be seen as an honest mistake.
Failing to account for all of your tips while working as a waitress may also be seen as negligence as opposed to outright fraud. While you may still face a 20 percent penalty in addition to a fine, there is little chance of jail or prison time in a negligence case.
It is always in your best interest to hire an attorney when dealing with the IRS. It is not uncommon to receive an audit or face accusations of fraud because of inaccurate or incomplete information. Your attorney may be able to prove that the IRS made the mistake and that you owe nothing.
How Should You React to a Charge of Tax Fraud?
While you should hire an attorney to help with your tax fraud case, the government may ask to talk to you directly at some point. It is critical that you understand your rights and what you are legally required to disclose. Under no circumstances should you provide the government with more information than they ask for.
It is also never a good idea to answer any questions that you don’t have a good answer for. It is better to defer to legal counsel or ask for time to collect more information as opposed to giving an incomplete or inaccurate statement. Remember, anything that you say or do during the course of an investigation can and will be used against you.
In the event that you are questioned prior to retaining legal counsel, you generally have the right to stop an interview by asking for counsel. The interview will generally end right away and resume when you have an attorney representing your interests.
A charge of tax fraud is one that you should take seriously as your personal and professional reputations could be on the line. While there is no guarantee that an attorney can win an acquittal or a plea in your case, your odds of achieving a favorable resolution to your case increase when you hire legal counsel.