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Of all types of fraud committed, IRS and tax fraud are by far some of the most serious offenses. The Internal Revenue Service and federal prosecutors will work together with the IRS criminal division to prove the charges in this type of fraud case. There are many things that qualify as fraud under tax laws, but typically the government is looking for deliberate, willful action that results in tax evasion or fraud. An IRS audit will often be performed prior to these charges being filed to determine if there is a willful case to pursue. Having a tax attorney on your side as soon as you are aware there might be an issue is critical to getting the best outcome for your case.
What Constitutes Tax Fraud?
Many fraud charges can be deemed intentional or accidental. In the case of taxes and IRS fraud, the government is only going to pursue intentional actions that result in defrauding the IRS or the federal government. Fraud can also occur at the state and local tax level, although it is much less common because these taxes are often more affordable. Illegal activities under this law include things like:
-Filing false tax returns that report lower earnings than you actually make
-Filing or submitting false documents and information
-Failure to file taxes entirely
-Failing to collect unemployment taxes
-Tax evasion, or avoiding paying taxes that are owed to the state or federal government
An IRS audit that reveals simple mistakes or carelessness usually doesn’t result in criminal charges right away. If intent isn’t obvious or can’t be proven, the IRS will usually simply attempt to collect the money that is owed, including penalties and interest. If, however, they do find intent to defraud, they could impose civil tax fines themselves, or turn the case over for criminal prosecution.
Tax Fraud as an Additional Charge
People already under investigation for other federal crimes will often be audited by the IRS or investigated by criminal prosecutors for potential tax evasion and fraud. If they can find any problems in your tax returns that point to illegal income or reporting of income, they might file additional fraud charges on top of your existing charges. If you are facing any kind of federal crime, it would be wise to ensure that your tax returns are in order to avoid further charges. A tax attorney can help you protect yourself and determine the best course of action when you are faced with a case like this.
Accidental Fraud and How to Avoid It
In some cases, you might accidentally defraud the IRS by filing your taxes incorrectly. These are the cases where they are less likely to file criminal charges, but you still need to be careful. Some examples of accidental fraud include:
-Filing a return without the appropriate forms or documentation. For example, if you take education credits on your taxes but do not know to file the Form 8863 required with those credits, you might be unknowingly committing a crime.
-Claiming the wrong deductions can be considered accidental fraud. This is especially important for small business owners and those who are self-employed, because deductions for business expenses can get tricky. If, for example, you use your personal cell phone for business, you can deduct the cost of service from your taxes. However, you cannot deduct your entire phone bill if you have other lines or family members using the service for personal reasons.
-Failure to report income, such as tips, can be constituted as breaking the law. IRS sources estimate that as much as 40% of the tips received by those in the service industry aren’t reported. They’re paying attention, so make sure you claim all tips and file appropriate paperwork with your taxes.
Call a Tax Attorney Right Away
If you are facing tax fraud charges for any reason, you need to hire a qualified lawyer as soon as possible. They can investigate the charges against you and help you come up with a solid defense so that you get the best outcome from your case. Contact our experienced Philadelphia tax fraud lawyers to learn more or to discuss your case today.