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Tax evasion is a serious offense that could result in significant financial and other penalties. If you are convicted of evading your obligation to pay income or other taxes, you could face many years in jail. You could also be obligated to pay any balance owed plus interest and penalties. Therefore, if you are accused of this crime, it is important that you hire an attorney right away.
Tax Evasion Or Tax Avoidance?
It is important to understand that it is completely legal to engage in tax avoidance. Tax avoidance occurs when you deduct moving expenses or a tax credit that you are entitled to receive. Those who own businesses may be able to deduct expenses or have some leeway over how they recognize revenue their companies generate.
Tax evasion occurs when you fail to report income or take a deduction or credit that you aren’t entitled to. For instance, a person who doesn’t have a child claiming a child tax credit would be engaging in tax evasion. It is worth noting that to be convicted of a criminal penalty, the government would need to prove intent. In most cases, inadvertently taking a deduction or credit that you aren’t entitled to isn’t a criminal act.
How Does the Government Find Out About Tax Evasion?
The IRS will generally only prosecute a person for tax evasion if his or her actions are especially egregious. For example, if a person fails to report more than 25 percent of his or her income, that could trigger an investigation. If a person claims $20,000 in income and $50,000 in charitable deductions, that would likely trigger an investigation.
It is worth noting that the IRS will generally work with people who engage with an audit in good faith. Those who turn themselves in may also be given reduced penalties in exchange for their cooperation. Therefore, if you receive an audit notice from the government, make it a point to respond to that notice. If necessary, your attorney can respond to the notice, and an attorney can handle any future discussions with the IRS as well.
What If You Just Made a Mistake?
Making a mistake on a tax return generally doesn’t result in jail time or other criminal penalties. However, if may still result in a sizable financial penalty in addition to paying addition taxes and interest. Therefore, it is always a good idea to have your return checked by a tax professional before sending it in. To reduce the chances of making an error that could lead to a tax evasion charge, you can amend your return as soon as an error is spotted.
What Happens If a Tax Preparation Professional Engages in Fraud?
No matter who prepares your return, you are responsible for its contents. Therefore, if your accountant changed information on your return to inflate a refund, you would still face a charge of tax evasion. Of course, the IRS will likely work with you if there is proof that another person or entity engaged in fraud. Your attorney may be able to work out a deal that allows you to avoid most or all penalties in exchange for your cooperation.
Is It Possible to Negotiate a Plea Deal?
In most cases, it is possible to work out a plea deal that could reduce or eliminate some or all penalties in the matter. The quality of your plea deal depends on the circumstances of your case. It also depends on if you have any information that the government could use to recover money from others.
In you have been charged with tax evasion, don’t wait to hire an attorney. The longer you wait, the longer the IRS has to build a case against you. Ultimately, this could hinder your chances of obtaining a favorable outcome in the matter.
Taxes are one of the few things that people all over the world have in common. Like other governments, the American government even has a specific department dedicated to collecting taxes. The IRS or Internal Revenue Service, keeps a close watch on each person’s tax returns. They do the same for companies. Taxes are due at certain times of the year. At some point in mid-April, private individuals and those who own companies are required to file federal taxes. For some people and business owners, filing a tax return is a relatively simple matter. In other instances, such as those who owe a great deal of taxes, people who live in one state and work in another or people with highly specific tax needs, filing taxes may be a highly complicated matter. It can take yards of paperwork and a great deal of effort to file their taxes properly.
Issues That Can Arise
IRS officials are careful to examine tax returns. Sometimes, they may choose to conduct what is known as an IRS audit. The audit may be conducted on a random basis purely by chance. However, in other instances, audits may be done for other reasons, such as officials suspecting there is issue with some kind of potential tax fraud.
Certain things can raise red flags when filing a tax return. For example, another company have reported income in your name but it is not listed on your returns. A person may be claiming to have made a large donation to a charity that is out of the ordinary for their personal financial circumstances. People can also run into possible closer scrutiny from the IRS because they are self employed and deducting a lot of losses or because they are claiming a home office deduction. Filers who make math errors may also be at risk from extra IRS attention.
The same issues can arise for people filing on behalf of a business. A business owner may make minor errors when reporting income or deciding which deductions to claim. IRS officials tend to look closely at certain companies if there’s been any sort of issue with fraud in the past or if those currently working there have a history of fiscal misconduct.
When being examined in this way, keep in mind that the IRS has power over this area of law. Officials can impose fines up to half a million dollars. People who are found to have deliberately engaged in tax fraud can face prison time. Professionals who engage in this form of fraud may be facing the loss of a professional work license. There are things that people can do in order to fight off charges and satisfy any potential accusations from the IRS.
An audit may sound scary but it doesn’t necessarily mean the person is guilty of anything. Bear in mind that most audits are purely by chance. The IRS will pick out a random person to audit and examine their refunds in greater detail. Now is not the time to panic or worry. However, it is time to be aware of your rights and your responsibilities. You may be asked to provide highly specific documentation. Have these documents on hand as soon as possible. The IRS will accept certain types of electronic documents as well as paper copies.
You can ask for additional time to get things together for the agency. In most cases, an audit will only go back no later than three years. If you are afraid there might be an issue of tax fraud, now is the time to seek immediate legal help from Delaware County tax fraud lawyers. They can help you make sure you are following all necessary rules and regulation that pertain to your case. Lawyers can also suggest a vigorous defense in the event there might be an issue with your tax returns.