Tax Fraud

Federal Criminal Tax Fraud and Tax Evasion

You likely do not need your Federal criminal lawyer or criminal defense attorney to advise you that April 15th is a date that has become synonymous with paying taxes. That is your accountant’s job. However, did you also know that more Federal Criminal Tax Fraud arrests occur on April 15th than on any other day during the year (by no means are you immune to this crime the remained of the year)? The reason is that the Department of Justice and Internal Revenue Service believe that there is a great deterrent effect by informing the public that they are looking at those tax returns, as well as individuals that, for whatever reason, fail to file a tax return.

Ever since the days of Al Capone, the Federal government has used the tax laws to investigate and prosecute businesses and individuals of all walks of life. The IRS has at its disposal many tools to investigate and prosecute alleged tax code violations. The Federal criminal defense attorneys and former New York and Federal prosecutors at Crotty Saland PC have the experience to help steer you through any type of investigation. Whether the IRS has charged you with failing to file a return, a business that has been accused of not submitting payroll tax, a restaurant that is under suspicion for not remitting sales tax, or a family accused of improperly deducting charitable donations or purported false characterization of income, we can assist you in resolving your criminal tax case. Crotty Saland PC’s experience, advocacy and knowledge can be your best defense if faced with these allegations or related arrests and indictment.

Typically, Federal prosecutors charge one or more of the following in a Federal Criminal Tax Fraud or Tax Evasion case. As you can see, the statutes are simple, but their application is quite complex, requiring a deep understanding of the Federal criminal statutes, case law and precedent.

Federal Tax Evasion: Title 26, United States Code, Section 7201

Tax Evasion under Title 26, United States Code, Section 7201 is defined as any person who willfully attempts in any manner to evade or defeat any Federal tax. There are three main elements of Federal Tax Evasion: First, that the defendant had a “substantial income tax deficiency.” Second, that the defendant made an affirmative attempt to evade or defeat the payment of the income tax. Third, that the defendant acted willfully.

For the first element, the government does not have to prove the exact amount owed or evaded. The government is required to establish only that the defendant owed a substantial amount of income tax. For the second element the government must prove that the defendant knew and understood that he had a tax deficiency (that he owed taxes). Additionally, the government must prove that the defendant intended to evade or defeat the tax due and that he also willfully did some affirmative act to try to accomplish this intent to evade or defeat that tax. An affirmative act is any act performed to mislead the government with respect to the amount of taxes due or to conceal income to avoid the assessment or payment of a tax. It is interesting to note that failing to file a tax return, standing alone, is not an affirmative attempt to evade or defeat a tax.

Tax Evasion is a Felony and can be punished by up to 5 years in prison and a $250,000 fine.

Failure to File a Tax Return: Title 26, United States Code, Section 7203

Failure to File a Tax Return under Title 26, United States Code, Section 7203, is defined as any person required by law to pay a tax, or to make a return, or keep any records who fails to pay the tax, make the return or keep the records.

There are three main elements of Failing to File a Tax Return. First, that the defendant was required to file a tax return. Second, that the defendant did not file a tax return at or before the time required by law or regulation. Third, that the defendant’s failure to file was willful.

Failure to File a Tax Return is punishable by up to 1 year in prison and a $100,000 fine.

Filing a False Tax Return: Title 26, United States Code, Section 7206

Filing a False Tax Return, under Title 26, United States Code, Section 7206, is defined as anyone who willfully makes any return, statement or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and the person does not actually believe such to be true and correct as to every material matter.

There are five main elements of Filing a False Tax Return. First, that the defendant made and subscribed and filed a tax return. Second, that the tax return contained a written declaration that it was made under the penalties of perjury. Third, that the return was false regarding a material matter. Fourth, that the defendant did not believe that the return was true and correct as to that material matter. Fifth, that the defendant acted willfully.

Filing a False Tax Return is a Felony and is punishable by up to 3 years in prison and a $250,000 fine.

Federal Tax Crime Arrests: Other Relevant Factors

What makes a matter “material”? As noted above, the false statement in the return must be material. This means that it must be essential to an accurate determination of the defendant’s tax liability. However, the government does not need to prove the existence of a tax deficiency or loss to the government.

What makes conduct “willful”? As noted above, the defendant as to any of these crimes must act “willfully.” Willfully means a voluntary and intentional violation of a known legal duty. A defendant’s conduct is not willful if he acted through negligence, mistake, accident, or due to a good faith misunderstanding of the requirements of the law. A good faith belief is one that is honestly and genuinely held.

All convictions under any Federal tax crimes also mandate that the defendant pay the tax, penalties and fees that remain due and owning, as well as reimbursing the government for the cost of the prosecution. Remember, the government can charge you not only with different tax crimes, but additional Federal White Collar crimes. Because of this, terms of incarceration and potential penalties can, and do, reach staggering levels.

Call the Federal criminal lawyers and former prosecutors at (212) 312-7129 or contact us online today.

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