Every year, the IRS launches thousands of criminal investigations. This year, the IRS has initiated more than 2,500 criminal investigations against taxpayers; 1,270 of these investigations resulted in convictions. More than 80% of individuals convicted were sent to prisons with an average sentence of 44 months. These statistics may seem intimidating if you’re under investigation for a tax crime. That’s why an attorney from Okabe & Haushalter is ready to fight for your rights.
What are fraud and evasion?
Generally speaking, tax fraud and tax evasion are illegal methods used by individuals to evade paying the Internal Revenue Service (IRS) money for income taxes, etc. There are many actions that may be considered fraud or evasion and both crimes come with serious consequences.
In order to be convicted of tax evasion, you must:
- Attempt to avoid paying your taxes
- Have outstanding tax payments
- Evade taxes willfully
If one of these three elements is not in place, you cannot be convicted of evading your tax payments. For instance, if you have unpaid taxes but did not willfully intend to avoid payment, you cannot be convicted of evasion. In order to prove your innocence, you must be able to demonstrate that one of these elements is not in place. If you’re facing a tax evasion or tax fraud charge, don’t give up. A skilled tax crime lawyer from our firm is ready to help.
Understanding the Consequences
If you are convicted of tax fraud, you may be sentenced to 3 years in a federal prison and subject to a $250,000 fine. If convicted of evasion, you may be sent to prison for 5 years and have to pay a $250,000 fine. If your business is convicted, the fine may be doubled.
Individuals and companies use a variety of tax evasion schemes to avoid remitting tax payments. Fraudulent tax returns alone may be responsible for billions of unpaid tax dollars every year. A tax evasion or tax fraud scheme may either be simple or extremely complicated. Some involve falsifying a tax return while other schemes involve creating offshore businesses and hidden bank accounts. Sometimes, employers attempt to evade paying income taxes by withholding tax money from their employees’ incomes but never actually giving the money to the IRS.
Other evasive and fraudulent schemes involve offshore bank accounts and International Business Corporations (IBCs). An offshore bank account is an account established in a foreign country—usually one that has financial secrecy laws. These countries are called tax havens. According to the IRs, more than 40 nations across the globe aggressively advertise themselves as tax havens, encouraging foreign investments by offering low- or no-tax environments.
If you’re under investigation for tax fraud or tax evasion, contact a lawyer from our firm today. We are more than ready to give you the legal assistance you need!
Defending Yourself from a Tax Evasion Conviction
The IRS actively seeks out individuals who are paying less than what they should owe. In some instances, the IRS will audit an individual who is entirely innocent of tax evasion or fraud. Actively and aggressively pursuing ways to minimize the amount of taxes you owe is not a crime. You can be charged with tax evasion for the following:
- Failing to file an income tax return
- Falsifying tax or other important information
- Exaggerating tax deductions or exemptions
- Concealing income from the IRS
- Reporting personal expenses as business expenses
In some cases, the IRS will file an income tax return for you should you fail to do so, but you will be prevented from receiving any deductions or exemptions.
Fraud & Evasion Penalties
In the United States, tax evasion is punishable by prison time and severe fines. More than 80% of individuals convicted of a tax crime are sent to prison. If convicted of tax evasion, you could be sent to a federal prison for five years and have to pay a fine of $250,000. If the IRS convicts your business of tax evasion, you may have to pay $500,000 in fines. Similarly, tax fraud is punishable by three years in prison and a $250,000 fine. If a business is convicted, the fine may be doubled. These penalties are severe and the IRS has an exceptionally high conviction rate. If you’re under investigation for tax fraud or tax evasion, call an attorney as soon as possible.
Common Tax Evasion Schemes
There are many types of tax fraud and evasion schemes. For instance, many evasion schemes involve income tax evasion. Per the IRS, some businesses practice a form of tax evasion called pyramiding, which occurs when a business or company withdraws income taxes from its employees’ paychecks but fails to give the tax money to the IRS. Instead, the business keeps the money. Usually, these businesses file bankruptcy to avoid responsibility related to their offense.
Other employers evade income tax payments by pay their employees in cash. This practice generally leaves employees with lost or reduced Medicare and Social Security benefits in the future. Additionally, it leaves the United States government with lost tax money. Some individuals attempt to conceal money from the IRS in order to avoid including it on their tax return. Offshore bank accounts are often used in this form of evasion.
According to the IRS, some countries (called “tax havens”) entice American investors into their banks by offering a no- or low-tax environment. These countries usually charge high fees when investors open their accounts in order to make up for the reduced taxes. About 40 countries and jurisdictions across the globe aggressively advertise themselves as tax havens, encouraging United States taxpayers to invest their money overseas and avoid paying taxes to the IRS.
We Are Intimately Familiar with Criminal Law
Tax crime cases require lawyers who are well-versed in the intricacies of tax law. Our criminal defense attorneys at Okabe & Haushalter have an exact knowledge of the laws governing state and federal taxes. We have handled many high profile cases and gained national media attention for our record of success. When it comes to tax evasion charges, you should not take any chances. Choose a firm with the necessary dedication, decisiveness, and aggressive attitude.