Federal Tax Crimes: Tax Evasion

For as long as there have been taxes, people have tried to avoid paying them. There is nothing wrong with taking advantage of any legal means available to reduce your tax liability, but if you step over the line to illegal activities you are likely to face criminal charges for tax evasion as well as civil charges after your criminal prosecution.

The criminal tax attorneys at Moskowitz, LLP, have extensive experience representing businesses and individuals accused of a wide range of financial wrongdoing, including tax evasion and other forms of tax fraud. Following are the most commonly prosecuted types of tax evasion seen in our office:

Failure to file tax returns

Having unfiled tax returns can land you in federal or state prison – this is part of the IRS’ overall filing enforcement strategy. The criminal punishment for not filing a tax return is one year in prison for every year not filed, up to a maximum of six years.

Underreporting of income

You could be prosecuted if the government believes that you omitted any amount of taxable income in your return. Liability is not measured in terms of gross or net income, or by any particular percentage of the tax shown to be due. Even if you believe that the amount due is insignificant, it is risky to represent yourself before the IRS or any other taxing agency.  For example, a man in San Francisco was sentenced to federal prison for underreporting by a mere $275!

Undisclosed offshore income and assets

Failure to properly disclose foreign income, accounts, or assets can result in significant civil and criminal penalties. The powers of the U.S. government and the IRS to enforce taxation and reporting requirements have grown far beyond our borders. The U.S. government and most of the rest of the world aggressive pursue and criminally prosecute people who hide offshore income or assets in order to avoid paying U.S. taxes.

Filing false tax returns, statements and documents

The IRS actively pursues taxpayers who submit fraudulent returns, statements and documents. For example, the following are on the IRS radar:

  • Failing to report business, rental and overseas income and assets
  • Inflating deductions or charitable contributions
  • Writing off personal expenses as business expenses
  • Maintaining two sets of books or otherwise falsifying company accounts
  • Making false statements

Filing fake Form 1099s or other false documents in order to hide taxable income or inflate tax refunds is also a huge red flag and has been on the IRS dirty dozen list of tax scams for many years.

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