What must be proven in a tax evasion charge?

In a recent post, we discussed whether accounting errors might lead to criminal tax charges. Today, we take a closer look at the specific crime of tax evasion.

The Internal Revenue Code at Section 7201 defines tax evasion as a willful act and elevates the criminal consequences to a felony. Yet how can willfulness be determined after the fact? Could a tax evasion charge be the result of an innocent mistake? These are questions best answered by a tax attorney. Yet the IRS does not treat certain behaviors lightly.

Generally speaking, intentional misrepresentation, or tax evasion, might be inferred by income that is grossly underreported, deductions that are inflated, or funds that were hid in offshore accounts. Of course, the prerequisite step is establishing that there is an unpaid tax liability. Given the complexity of the tax code, there may be some ambiguity over whether the IRS has taken the correct stance in the tax controversy. 

As a law firm that has helped both individuals and businesses in their tax disputes with the IRS, we know that there is often a strategy involved in tax litigation or criminal tax charges. This is especially true in the specific example of tax evasion because the IRS has a high burden of proof. Since the charge is a felony under criminal law, the IRS must convince a jury by proof beyond a reasonable doubt of three elements: an unpaid tax liability; an action taken by the defendant to evade the tax, even if unsuccessful; and the individual's specific intent to avoid his or her legal duty to pay the tax at issue.

Source: Legal Information Institute, “Tax evasion,” accessed Oct. 2015, LII 

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