When does a tax crime equal prison time?

It may seem like an innocuous crime that would come with, at most, a financial penalty. Unfortunately, this is not always the case. The Internal Revenue Service (IRS) does not take lightly to information a tax payer may be committing tax crimes. 

When are tax crimes serious?

One key distinction: tax fraud versus negligence. Negligence occurs when a taxpayer makes a mistake. However, the IRS generally pushes for increased penalties when the prosecution can establish the crime went beyond simple negligence and was fraudulent.

Tax fraud occurs when the attempt to evade one’s tax obligations is willful. In an earlier post, available here, we discussed whether willfulness mattered when it comes to tax crimes. Ultimately, we explain why the question of intent matters when building a defense to these allegations. The IRS is more likely to push for prison time if there is evidence the taxpayer intentionally failed to file tax return, pay their tax bill or made fraudulent claims on their returns.

What type of evidence will the IRS look for?

The IRS will look for falsification of documents or any attempts to conceal or hide income. Auditors may also check to see if there were suspicious transfers or if there are accounts that are not reported on one’s tax returns. The auditor will also check to see if there were any fraudulent claims deductions, such as a non-existent dependent or business loss.

Do I need an attorney?

Allegations of unpaid tax obligations can quickly escalate to serious penalties. As a result, it is generally wise to seek legal counsel to build a defense.

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