Tax fraud can lead to tax debts and criminal charges

On Behalf of | Jul 6, 2024 | Criminal Defense |

No one wants to pay more than they owe in federal income taxes. People tend to make use of every deduction, tax credit and legal loophole they can find to diminish their final tax bills or increase their annual income tax refunds after filing their returns.

It is perfectly acceptable and legal to use systems in place to limit tax liability. It is another matter altogether to intentionally misrepresent circumstances in the hopes of diminishing tax responsibility. Those accused of lying about their finances to the Internal Revenue Service (IRS) could face audits. Other times, the federal government might pursue criminal charges against them.

Tax fraud is one of the more serious white-collar criminal charges regularly prosecuted in federal court. Tax fraud can lead to a host of penalties if people plead guilty or get convicted at trial.

What technically constitutes tax fraud?

An assortment of different behaviors can lead to accusations of tax fraud. The failure to report smaller, secondary streams of income might be tax fraud. Employers and businesses that work with contractors typically report what they pay to outside parties to the IRS.

If someone’s tax return does not reflect all of the revenue received from businesses and clients, that might lead to allegations of tax fraud. Intentionally misrepresenting personal holdings, possibly by undervaluing personal property, can also constitute tax fraud. Some people go so far as to lie about international or digital resources because they assume the IRS can’t find those assets.

Tax fraud could also involve claiming deductions or credits that a taxpayer they are ineligible to receive. Any intentional misrepresentation of financial circumstances can constitute tax fraud and might lead to prosecution.

What are the penalties for tax fraud?

The nature of the fraud and the extent of the underpayment of taxes influence the penalties possible. Some people only face financial penalties including fines and an obligation to pay the taxes they previously avoided. The IRS can also impose penalties and interest on the amount of tax currently due to the federal government. In more extreme cases, a conviction or guilty plea when facing tax fraud allegations could also lead to up to five years of incarceration.

How can people defeat their charges?

There are many different ways for those accused of tax fraud to fight the allegations they face in Federal court. A thorough review of financial records and tax documents can help someone establish that they filed their returns and paid their taxes in good faith. Sometimes, small technicalities can make all the difference for those accused of a tax-related criminal offense.

Responding assertively to white-collar criminal charges could help taxpayers minimize the disruption those charges may cause. Taxpayers who understand the risks involved may recognize how important responding appropriately to tax fraud charges actually is.