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Renaissance Centre, 405 N. King Street, 8th Flr., Wilmington, DE 19801
221 W 10th St, Suite 412, Wilmington, DE 19801
112 French Street, Wilmington, DE 19801
222 Delaware Ave, Suite 1410, Wilmington, DE 19801-1621
222 Delaware Ave, Suite 1030, Wilmington, DE 19801
1201 N Market St, Suite 1200, Wilmington, DE 19899
123 S Justison Street, Suite 100, Wilmington, DE 19801
222 Delaware Ave., Suite 700, Wilmington, DE 19801
1201 N Market St, Suite 1407, Wilmington, DE 19801
1201 North Market Street, Suite 800, Wilmington, DE 19801
222 Deleware Ave, Suite 1710, Wilmington, DE 19801
300 Delaware Ave, Suite 1015, Wilmington, DE 19801
222 Delaware Avenue, Suite 1101, Wilmington, DE 19801
500 Delaware Avenue, Suite 1410, Wilmington, DE 19801
1201 N Market St, Suite 1400, Wilmington, DE 19801
1000 N. West Street, Suite 1244, Wilmington, DE 19801
600 N King St, Suite 300, Wilmington, DE 19801-3700
1007 N Orange St, 4th Floor, Wilmington, DE 19801
222 Delaware Avenue, 17th FL, 17th Floor, Box 1114, Wilmington, DE 19899
824 N. Market Street, Suite 710, Wilmington, DE 19801
222 Delaware Ave, Suite 1200, Wilmington, DE 19801-1050
500 Delaware Ave, Suite 220, Wilmington, DE 19801
222 Delaware Avenue, Suite 800, Wilmington, DE 19801
1201 North Market Street, Suite 1500, Wilmington, DE 19801
300 Delaware Avenue, Suite 1010, Wilmington, DE 19801
Claymont Federal Tax Fraud Information
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What Constitutes Tax Fraud?
Tax fraud involves the willful failure to pay taxes. According to the Internal Revenue Service (IRS), tax fraud is an intentional wrongdoing by the taxpayer, with the intent to evade paying taxes owed through misrepresentation of material facts. Tax fraud requires an intent to commit fraud or evade tax payment. Making a mistake on your tax forms or filing your taxes late are generally not considered fraud.
There are many ways a taxpayer can commit tax fraud. Common types of tax fraud may involve:
- Failure to report income
- Failure to file a tax return
- Filing a false return
- Assisting others in committing tax fraud
- Failure to pay employment taxes
- Fraudulent accounting to avoid taxes
- Overstating deductions
- Hiding money in offshore accounts
- Making fraudulent deductions
How Does the IRS Investigate Tax Fraud?
The IRS has a Criminal Investigation Division to conduct criminal investigations for tax fraud. There are several ways the IRS can be alerted to possible fraud. Tax fraud can show up when investigators are looking into other federal crimes, like money laundering or wire fraud. Fraud can be identified through computer algorithms that look for signs of potential fraud and notify tax officials to look more closely at the taxpayer and their return. Auditors and revenue collectors may also report suspected criminal fraud.
The IRS also has a whistleblower office to take reports from the public, including employees, co-workers, neighbors, or even family members who report suspected tax fraud. The whistleblower program provides an award for between 15% and 30% of the total proceeds recovered by the IRS.
When the IRS opens a criminal investigation, they may review financial records, conduct surveillance, take out search warrants, and subpoena records from financial institutions to gather evidence. If there’s enough evidence to support criminal charges, the Department of Justice or the United States Attorney may take the case to trial.
What Is the Punishment for Tax Fraud?
Tax fraud is a criminal offense. Most tax fraud offenses are treated as felonies. For example, tax evasion under IRC § 7201 is a felony, with penalties including up to $100,000 in fines (up to $500,000 in fines for corporations) and a jail sentence of up to 5 years. Other felony tax fraud charges that can include federal prison time involve:
- Felony failure to collect or pay over tax
- Felony failure to report certain cash transactions
- Felony filing false tax returns
A tax fraud conviction can also result in fines, paying the legal costs for the government, and restitution.
How Much Will I Owe for Tax Fraud?
Tax fraud can result in criminal penalties and civil penalties. Penalties for a civil offense generally include fines, fees, or money damages. Under the U.S. Code, the IRS can impose a fraud penalty of 75% of the portion of the fraud underpayment added to the tax. For example, if a taxpayer fraudulently underpaid $40,000 in taxes, the IRS could add an additional $30,000 fraud penalty, for a total of $70,000 owed.
How Far Back Can the IRS Go In Tax Fraud?
The IRS generally does not go back more than 3 years to audit federal tax returns. If there is a substantial error, the IRS may be able to go back 6 years. However, there is no time limit in cases of tax fraud. If the IRS identifies fraud in the tax filings of a 30-year-old corporation, the IRS could go back 30 years to collect fraudulent underpayments and any additional penalties.
When Should I Hire a Tax Fraud Attorney?
The time to think about hiring a tax fraud attorney is when you learn about a possible IRS criminal investigation. You may not want to wait until fraud charges are filed. Having a tax attorney represent you during the investigation may be able to help you avoid saying the wrong thing that could end up being used against you.
Can a Tax Attorney Negotiate With the IRS?
There are several ways a tax attorney can help you in a tax fraud case. Even before the case goes to trial, your criminal defense attorney can negotiate with the IRS. Your attorney may be able to negotiate an agreement to pay a set amount of taxes on a payment plan and avoid criminal charges. A tax lawyer may also be able to negotiate to reduce the charges, accept a lesser offense, and avoid jail time.
If you do not want to take a plea agreement, you can still take your case to court. There may be strong legal defenses in your case, to help you avoid a criminal conviction. The prosecutor has the burden of proving every element of the federal offense, beyond a reasonable doubt. If your tax lawyer can introduce a little bit of doubt into the minds of the jurors, you should not be found guilty. Possible defenses to tax fraud charges may include:
- Defendant had a good faith belief that they filed correctly
- Tax errors were committed by mistake or clerical error
- Defendant had no intent to defraud the government
- Evidence was collected through an unlawful search in violation of the defendant’s constitutional rights