Income
Tax Fraud is the willful attempt to evade tax law or defraud the IRS. Tax fraud
occurs when a person or a company does any of the following:
•
Intentionally fails to file a income tax return
•
Willfully fails to pay taxes due
•
Intentionally fails to report all income received
•
Makes fraudulent or false claims
•
Prepares and files a false return
Selig & Associates provides
the most aggressive tax representation allowed by law. Specializing in Trust
Fund Recovery Penalty (TFRP) representation, and all payroll, income and sales
tax controversies. We settle contested tax audits; negotiate excellent
payment plans, compromise tax debts, and resolve all civil and criminal tax
issues, including innocent spouse relief and separation of liability. Call
(212) 974-3435 for a FREE Consultation or meet us Face to Face in our conveniently
located Manhattan offices.
Is
it Negligence or Income Tax Fraud?
The
IRS understands that the tax code is a complex set of regulations and rules
that are difficult for most people to decipher. When careless errors occur, if
signs of fraud are absent, the IRS will usually assume that it was an honest
mistake rather than the willful evasion
of the tax code. In this circumstance, the tax auditor will usually
consider it a mistake that is attributable to negligence. Although
unintentional, the IRS may still fine the taxpayer a penalty of 20 percent of
the underpayment.
•
Overstatement of deductions and exemptions
•
Falsification of documents
•
Concealment or transfer of income
•
Keeping two sets of financial ledgers
•
Falsifying personal expenses as business expenses
•
Using a false Social Security number
•
Claiming an exemption for a nonexistent dependent, such as
a child
•
Willfully underreporting income
Who
Commits Income Tax Fraud?
Service
workers paid mostly in cash
and self-employed taxpayers running cash-based businesses have been identified
as the taxpayers committing most of the tax fraud because it is easy to underreport
cash income. Restaurant and clothing storeowners, car dealers, salespeople,
doctors, lawyers, accountants, and hairdressers were ranked as the top
offenders in a government study of income tax fraud. Service workers, such as
restaurant servers, mechanics, and handymen, also commonly underreport cash
income.
Selig & Associates provides
the most aggressive tax representation allowed by law. Specializing in Trust
Fund Recovery Penalty (TFRP) representation, and all payroll, income and sales
tax controversies. We settle contested tax audits; negotiate excellent
payment plans, compromise tax debts, and resolve all civil and criminal tax
issues, including innocent spouse relief and separation of liability. Call
(212) 974-3435 for a FREE Consultation or meet us Face to Face in our conveniently
located Manhattan offices.
IRS
Criminal Investigation into Income Tax Fraud
The
IRS conducts investigations into alleged violations of the tax code through the
IRS Criminal
Investigation (CI), the law enforcement branch of the agency. CI
agents investigate tax crimes, money laundering, and Bank Secrecy Act
violations. Investigators use sophisticated methods to uncover computer
information protected by encryption, passwords, and other barriers. Because the
tax system relies on "voluntary compliance," or the self-assessment
of the taxes owed, the IRS attempts to discourage violations by publicizing
convictions, seeking prison time for offenders, and by assessing fines, civil
taxes, and penalties.
Penalties
for Income Tax Fraud
A
taxpayer that willfully attempts to evade paying income taxes is subject to
criminal and civil penalties. The type of fraud will determine the applicable
penalty. The following are some examples of possible punishments for specific
types of tax fraud:
•
Attempt to evade or defeat paying taxes: Upon
conviction, the taxpayer is guilty of a felony and is subject to other
penalties allowed by law, in addition to (1) imprisonment for no more than 5
years, (2) a fine of not more than $250,000 for individuals or $500,000 for
corporations, or (3) both penalties, plus the cost of prosecution (26 USC 7201).
•
Fraud and false statements: Upon
conviction, the taxpayer is guilty of a felony and is subject to (1)
imprisonment for no more than 3 years, (2) a fine of not more than $250,000 for
individuals or $500,000 for corporations, or (3) both penalties, plus the cost
of prosecution (26 USC 7206(1)).
Willful failure to file a return, supply information, or pay tax
at the time or times required by law. This includes the failure to pay
estimated tax or a final tax, and the failure to make a return, keep records,
or supply information. Upon conviction, the taxpayer is guilty of a misdemeanor
and is subject to other penalties allowed by law, in addition to (1) imprisonment
for no more than 1 year, (2) a fine of not more than $100,000 for individuals
or $200,000 for corporations, or (3) both penalties, plus the cost of
prosecution (26 USC 7203).
