Tax Fraud is a serious crime with serious consequences. According to the Internal Revenue Service (IRS), abusive tax schemes can be simple or complicated. As tax fraud – sometimes referred to as tax evasion – is considered a direct offense against a federal agency, it is nearly always charged as a federal crime. As such, various law enforcement agencies work closely with prosecutors to conduct thorough investigations and gain convictions.
In many situations, tax avoidance is a common practice and one that is entirely legal, such as avoiding taxes on income through the use of retirement accounts. In other circumstances that involve deception and the intent to misrepresent facts, tax avoidance becomes a serious federal offense.
Employment tax fraud schemes are one of the most common forms of fraud and evasion. Sometimes, companies withhold income tax money from their employee's paychecks but never remit payment to the IRS. This is called pyramiding.
In other situations, businesses commit tax fraud by paying employees with cash. Without knowledge of the cash payments, the IRS cannot demand income tax from the business. Many companies that practice this form of tax fraud end up dissolving, leaving hundreds of thousands of dollars unpaid to the IRS.
If convicted of tax fraud or evasion, businesses may be subject to exorbitant fines. For individuals, there are also very severe criminal penalties at stake. Auditors will work tirelessly to detect tax fraud and to determine if the fraud was a willful act intended to defraud the IRS. They carefully consider whether tax discrepancies were willful or the result of negligence and error.
Should criminal charges be pursued, accused individuals can face steep fines and terms of imprisonment in a federal prison. If other related criminal charges are pursued – including money laundering and embezzlement – penalties can be intensified.
If you or your loved one has been charged with tax fraud, are currently under investigation for tax fraud, or believe that charges may be pending, you should be focused on consulting an experienced attorney as soon as possible.