Tax fraud is an offense that comes with severe penalties. The Internal Revenue Service estimates that about 17 percent of taxpayers violate tax laws in some form of tax fraud. A majority of tax fraud cases involve individuals rather than corporations. But do all failures to comply with tax code amount to tax fraud? To make this determination, it is important to first get a good understanding of what constitutes tax fraud.
Income tax fraud is defined as the deliberate or willful attempt to evade tax law or defraud the IRS. Tax fraud is said to have occurred when a taxpayer intentionally doesn’t file an income tax return; deliberately fails to pay taxes that are owed; intentionally fails to report all income earned or received; makes fraudulent claims in the tax return; and prepares and files an inaccurate or false return.
IRS investigators conduct probes of tax crimes, money laundering and other violations of the tax code. During the course of their investigation, they may use sophisticated methods to uncover information. If you are convicted of tax fraud, you face both civil and criminal penalties depending on the type of fraud that is alleged. For example, if a taxpayer is guilty of felony tax fraud, he or she may be looking at up to five years in federal prison and a fine of up to $250,000.
If convicted of making fraudulent or false claims, which is also a felony, taxpayers could face up to three years in prison and a fine of up to $250,000. When you fail to file a return or pay taxes in a timely manner, which are misdemeanor offenses, taxpayers could face up to a year in prison and a fine of up to $100,000. These are without question extremely serious consequences that could affect your life in every possible way.
If you are being audited by the IRS or have been accused of tax fraud or are being investigated for tax fraud, contact an experienced Virginia tax evasion attorney who can guide you through this difficult and stressful time.