Every year, individual Americans and businesses wait until the last minute to file their taxes. Every year, mistakes are made and the IRS comes looking for the rest of its money. In an attempt to avoid having a professional prepare their taxes, they have created a situation where they now require a professional Virginia tax fraud lawyer to defend them from the scrutiny of the IRS.
What is Tax Fraud?
Tax fraud and tax evasion were the only crimes that they could stick to Al Capone, but it was enough to get him sent to Alcatraz after a decade of terrorizing Chicago.
Tax fraud is the intentional evasion of the payment of taxes, generally by submitting false information or omitting certain pieces of information from your tax forms. This happens a lot to those who own small businesses or are independent contractors. They attempt to hide an income stream from the IRS in the hopes that they will not have to pay taxes on it, but eventually, the IRS figures it out and then they come knocking on your door.
Red flags that the IRS will be looking for, also known as “badges of tax fraud” include:
- Understating income
- Overstating deductions
- Accounting irregularities
- Concealing assets
- Poor recordkeeping
- Failure to file taxes
- Dealing solely in cash
If the IRS suspects you of tax fraud or evasion, you can face both civil and criminal penalties.
What are IRS Civil Charges?
Taxpayers can be subjected to both a civil and criminal investigation at the same time. This is called a parallel investigation. A civil investigation will be triggered when the IRS finds irregularities in accounting or notes any of the above “badges” of tax fraud. Before the IRS can proceed with a civil or criminal case, they must first perform an audit to prove that tax fraud has occurred.
To impose civil penalties, the IRS must find that there is clear and convincing evidence of tax fraud. The standard of proof in a civil case is lower than a criminal case. The IRS need only show that the allegations are more likely than not. They must also, however, prove that the misconduct was intentional, which means it could not have been the bad advice of a professional, negligence, or carelessness that caused the tax fraud. Negligence or carelessness can, however, form the basis of an audit.
What are IRS Criminal Charges?
Tax evasion is considered a federal crime and a felony at that. It can result in a five-year sentence in federal prison and a $250,000 fine. These investigations are performed by the IRS Criminal Investigation Division, the branch that is responsible for investigating taxpayers who either underreported a lot of money or have shown that they are habitual offenders. The IRS must show that the taxpayer violated portions of the Internal Revenue Code, Bank Secrecy Act, or was engaged in money laundering.
Criminal investigations are initiated by an auditor who believes that the case that they’ve been assigned amounts to an intentional attempt to defraud or deceive the federal government. After a referal, IRS agents will conduct an investigation to determine if there has been a crime. Agents can subpoena bank records, conduct surveillance, and interview witnesses.
If the IRS has enough evidence to move forward, they will file charges against the taxpayer.
How Can a Virginia Tax Fraud Lawyer Help?
Our job is to minimize the potential penalties to you if you are suspected of tax fraud or currently under investigation. The IRS won’t play fair. They will ask you questions that they already know the answers to and try to trap you in a lie. Once they have that, they can move forward with criminal charges.
If you are under investigation, a Virginia tax fraud lawyer can help you stay out of prison and protect you from other serious consequences. Contact Sodowsky Law Firm, PC today for more information.