Income Tax Fraud

Tax Fraud occurs in situations where businesses or individuals knowingly and intentionally fail to file their income tax return with the purpose of evading tax law requirements.  Additionally, tax fraud occurs when businesses or individuals falsify the information on their tax return with the intent to defraud the tax system.  Fraud occurs by failing to state the correct amount of earned income for individuals, or the total revenue for businesses.  Fraud also includes the practice of intentionally overstating deductions and exemptions and by falsifying documents in connection with the completion and filing of tax returns.  There are many specific elements and standards required to rise to the level of tax fraud, but once the level is reached, the punishment can be significant and can include both criminal and civil penalties.  Tax fraud includes crimes such as tax evasion, attempt to defeat taxation, tax avoidance, willful failure to pay, willful failure to keep adequate records and fraudulent employment statements and other fraudulent records.

Income Tax Fraud

Income tax fraud occurs when individuals either fail to file their income tax returns or when they intentionally fabricate the contents of their tax returns in an attempt to defraud the IRS.  Income tax fraud can involve the omission of wages earned, as well as the overstatement and improper application of deductions and exemptions.  Any intentionally or knowingly fraudulent filing will be subject to IRS penalties and fines.

Tax Fraud Investigation

Tax Fraud Investigation occurs within the IRS Criminal Investigations Unit.  The Criminal Investigations Unit is the enforcement branch of the IRS, tasked with conducting investigations on taxpayers who are suspected of willfully, knowingly and intentionally violating the IRS tax laws.  The enforcement is specifically targeting those individuals who purposely and knowingly falsify or otherwise fraudulently file their returns with the intent to defraud the government.  The General Tax Fraud Program, the largest Criminal Investigation enforcement program within the IRS, investigated fraud cases ranging from individual tax evasion to far-reaching money laundering crimes.

Penalties for Tax Fraud

Tax Fraud Penalties can be significant and can have long-lasting effects on individuals and businesses alike.  The consequences for fraudulent filings or intentional failure to file can include both criminal and civil penalties.  The criminal consequences occur after formal criminal charges are filed against an individual or business.  Such charges must be filed within six years of the date that the taxes were due, and the time limit applies only to criminal situations.  Additionally, businesses or individuals who are fraudulent non-filers are subject to fines that can be up to $25,000 per year of unpaid taxes, as well as imprisonment for one year for each year of fraudulent non-filing.

The civil penalties imposed on fraudulent non-filers or those who file fraudulent returns includes the imposition of fines and interest added to the tax owned.  The interest imposed is compounded daily and will continue to compound until that tax liability is paid in full.  Unlike the six year statute of limitations for criminal charges, civil penalties have no such limit and will accrue interest indefinitely.  If the IRS is able to substantiate a claim of willful intent to evade taxation, the IRS has the ability to reach as far back in time as they wish, without limitation.   Thus, the IRS may decide to assess penalties, fines and interest on all unpaid taxes, going back to beginning of the taxpayers’ adult life.

Tax Fraud Attorney Help

To avoid severe penalties and prosecution by the IRS, individuals and businesses should take all necessary measures to prevent fraud as part of the filing process.  To understand the allowable deductions, exemptions and write-off’s, it is very helpful to seek the guidance of experienced tax professionals, include taxation attorneys.  In the event that an investigation by the IRS commences against you, obtaining representation by a skilled tax attorney is critical to achieving the most agreeable outcome possible.