The Internal Revenue Code (Title 26 of the United States Code) contains numerous tax violations exposing taxpayers to both civil and criminal penalties. An additional handful of tax crimes can also be found in USC Title 18, the federal government’s main criminal code. Conviction for some of these tax law violations can land individuals in jail for five years and hit them with as much as $100,000 in fines. Corporations can face fines five times as high.
U.S. tax crimes are no joke. Any potential tax law violation should be treated very seriously, and your first step should be to call an experienced and knowledgeable tax lawyer. Attorney Richard S. Lehman has been practicing tax law for over 50 years, including advising and representing individual and corporate taxpayers accused of tax evasion and other federal tax law violations. If you are being investigated for or accused of tax crimes, call Lehman Tax Law at 561-368-1113 for immediate assistance.
Violation of IRC 7201, Attempt to Evade or Defeat Tax, is a felony punishable by up to five years in prison and $100,000 in fines, or as much as $500,000 for a corporation found guilty of tax evasion. For the government to convict, they have to prove three elements of the offense:
- An affirmative act in an attempt to evade taxes
- An additional tax due and owing (deficiency)
The IRS must prove each element of the offense beyond a reasonable doubt. This high standard protects individuals accused of tax evasion from unfounded accusations. The accused also have several defenses to the charge they might be able to use. On the other hand, the government has lots of ways it can go about proving the elements of tax evasion. Getting high-quality, dedicated legal representation is essential to obtaining a positive outcome in your case.
Tax evasion is further classified as either evasion of assessment or evasion of payment.
Evasion of Assessment means filing a false return or a false amended return that omits income and/or claims deductions the taxpayer isn’t entitled to. For instance, filing a false W-4 claiming to be exempt from taxation and then not filing a return could be evasion of assessment. A corporate officer found diverting corporate funds to pay personal expenses, sluicing off corporate income to principal shareholders, overstating deductions, or concealing bank accounts could also be found guilty of evasion of assessment.
Evasion of Payment involves actively hiding money or assets that could be used to pay the tax. Tax evasion of payment requires some affirmative act, so merely failing to pay or refusing to pay even if able would not be a violation of IRC 7201. However, it might violate section 7203 (below). Examples of this form of tax evasion could include using other people’s bank accounts, paying exclusively with cash or other people’s credit cards, or putting assets in other people’s names. Bankruptcy fraud may be another form of evasion of payment (it is legitimate to file for bankruptcy to receive the benefit of the automatic stay and try to remove levies, but not to fraudulently evade paying taxes).
Failure to File
IRC section 7203 prohibits Willful Failure to File, Supply Information or Pay Tax. Violation of this law could be charged for failure to pay a tax, failure to file a return, failure to keep records, or failure to supply information. Penalties include up to a year in prison and/or $25,000 in fines ($100,000 if the violator is a corporation). In some cases, the possible prison sentence could potentially be as high as five years.
The elements of a 7203 offense include:
- Duty required by law
- Failure to perform that duty
- Violation was willful
To be willful, the government must show a voluntary, intentional violation of a known legal duty. For violation of failure to file, failure to pay or failure to supply information, the IRS must also establish that the defendant had the ability to pay.
Section 7203, like other tax law violations, is not as cut-and-dried as it may appear. Who is under a duty required by law to perform one of the above tasks? What types of filings qualify as a “return” under the law? Each element of the offense must be proven by the government; a qualified tax crimes attorney knows there are defenses to every element that are worth investigating in any prosecution.
Willful Failure to Collect or Pay Over Tax
The elements of an IRC 7202 violation are 1) a duty to collect and/or truthfully account for and pay over tax; 2) failure to do so; and 3) willfulness. For instance, third parties may be obligated to collect excise taxes and deduct FICA from wages (trust fund taxes), and they could be prosecuted under 7202 for a willful failure to do so.
Fraudulent Withholding Exemption Certificate or Failure to Supply Information
IRC 7205 has two aspects: withholding on wages and backup withholding on interest and dividends. This law focuses on the employee’s filling out Form W-4 (employee’s withholding certificate) or W-4E (claiming exemption from withholding). It’s a violation of 7205 to falsely claim exemption from withholding or falsely inflate the number of allowances claimed to reduce or eliminate taxes withheld, i.e., fraudulently claiming too many dependents.
Fraud and False Statements
IRC 7206 deals with the following matters:
- Declaration under the Penalties of Perjury – falsely inflating deductions or underreporting income on returns to reduce or avoid tax burden; making a materially false statement that one did not believe to be true with the specific intent to violate the law
- Aiding or Assisting the Preparation of a False or Fraudulent Document
- Removal or Concealment with Intent to Defraud
- Compromises and Closing Agreements
Fraudulent Returns, Statements or other documents
IRC 7207 deals with a taxpayer under audit who responds to requests to substantiate claimed deductions or credits with false, altered or fake documents.
Attempts to Interfere with Administration of Internal Revenue Laws
IRC 7212 prohibits the “corrupt or forcible interference” of or “corrupt endeavor to impede” an IRS employee in the performance of their duties, as well as the “forcible rescue of seized property.” Using force or the threat of force to intimidate, impede or obstruct an IRS agent could be a violation of this law.
Related Title 18 Offenses
In addition to the tax law violations found in Title 26 of U.S. statutes (the Internal Revenue Code), many related offenses can also be charged under Title 18, the federal government’s main criminal code. Some of these offenses are:
- Aiding and Abetting (18 USC 2)
- Conspiracy to Defraud the Government with Respect to Claims (18 USC 286)
- False, Fictitious or Fraudulent Claims (18 USC 287)
- Conspiracy to Commit Offense or Defraud the United States (18 USC 371)
- Fictitious Obligations (18 USC 514)
- Identity Theft (18 USC 1028)
Being charged with any tax law violation is a very serious matter. You could be facing tens of thousands of dollars in fines and years in prison, in addition to being forced to pay any tax in dispute, plus interest and penalties. U.S. tax crimes attorney Richard S. Lehman can help you understand your situation and work out the best resolution in your favor, including building a strong defense and fighting your case in court if necessary.
Don’t Delay. Get Help With Tax Crimes Charges Today.
If you’ve been charged with a tax crime, don’t take chances with your future. Call Lehman Tax Law at 561-368-1113 to discuss your options with a skilled, knowledgeable and experienced tax crimes attorney.