What are Federal Tax Evasion Crimes?

Federal tax evasion crimes refer to the illegal act of intentionally and knowingly evading the payment of federal taxes owed to the government. Tax evasion involves the deliberate manipulation, concealment, or misrepresentation of financial information to reduce or eliminate tax liability. It is important to note that tax avoidance, which is legally arranging financial affairs to take advantage of certain legitimate tax deductions, rebates, credits, or shelters is perfectly legal.

Common Examples of Federal Tax Evasion Crimes Include:

Underreporting Income: Intentionally failing to report all or a portion of income earned from various sources, such as employment, business profits, investments, or rental properties, with the intention to avoid paying taxes on that income.

Inflating Deductions or Expenses: Intentionally exaggerating deductions, expenses, or exemptions on tax returns in order to reduce taxable income artificially.
Offshore Tax Evasion: Intentionally concealing income or assets in offshore accounts with the purpose of evading taxes. This involves intentionally failing to report offshore bank accounts, investments, or income generated from overseas sources.

Falsifying Documents: Intentionally creating or altering financial documents, such as invoices, receipts, or records, to misrepresent income, deductions, or other relevant financial information on tax returns.

Engaging in Illegal Schemes: Knowingly participating in fraudulent schemes, such as abusive tax shelters, phony trusts, or fraudulent tax refund claims, designed to deceive the government and avoid paying taxes.

Identity Theft: Intentionally using another person’s identity or Social Security number to file fraudulent tax returns and claim refunds.
Payroll Tax Evasion: Withholding or collecting payroll taxes from employees but intentionally failing to remit those taxes to the government.

Federal tax evasion is investigated and prosecuted by the Internal Revenue Service (IRS) and the U.S. Department of Justice (DOJ). If convicted, individuals can face significant fines, interest charges, and potential imprisonment. The severity of penalties depends on factors such as the amount of tax evaded, the duration of the evasion, the extent of fraudulent intent, the involvement of accomplices, and the individual’s criminal history.

Potential Penalties:

Criminal Penalties: Tax evasion is considered a federal crime, and if convicted, an individual can face imprisonment. The maximum sentence for tax evasion is typically five years in federal prison, although it can be increased in certain circumstances.
Fines: Individuals convicted of tax evasion may also be subject to substantial fines. The amount of the fine can vary based on the specific tax laws violated and the amount of taxes evaded. The fine can be a fixed dollar amount or a percentage of the taxes owed.
Restitution: In addition to fines, a court may order the individual to pay restitution, which involves reimbursing the government for the taxes owed, plus any interest and penalties.
Civil Penalties: The IRS can impose civil penalties for tax evasion, separate from any criminal charges. These penalties can include fines based on the amount of taxes evaded, as well as interest charges on the unpaid taxes.

What Does a Federal Tax Evasion Defense Attorney Do?

A federal tax evasion defense attorney is experienced in representing individuals or businesses who are facing criminal charges related to tax evasion at the federal level. Tax evasion refers to the intentional and illegal act of avoiding paying taxes owed to the government by using deceptive or fraudulent methods. It is important to note that a person must be aware of the law and intentionally violate it.

If a person violates the law, but honestly was incorrect about what the law required, a legal defense may exist often referred to as the Cheek defense. In Cheek v. United States, the Supreme Court held that the government must “prove that the law imposed a duty on the defendant, that the defendant knew of this duty, and that he voluntarily and intentionally violated that duty.” The attorneys at The Attorneys For Freedom Law Firm have experience with the Cheek defense.

The role of a federal tax evasion defense attorney is to provide legal representation and guidance to clients who are accused of tax evasion. Their primary objective is to protect their client’s rights and achieve the best possible outcome in the legal proceedings.

Here are some of the key tasks and responsibilities of a federal tax evasion defense attorney:

Legal Counsel: The attorney will assess the client’s case, review the evidence, and provide legal advice regarding the charges, potential defenses, and available options. They will explain the complex tax laws and regulations relevant to the case. The attorney should explore mens rea defenses including the Cheek defense.
Investigation: The attorney will conduct a thorough investigation to gather evidence, review financial records, and analyze tax filings to build a strong defense strategy. They may work with forensic accountants or other experts to identify any errors, inconsistencies, or legal loopholes that can be used in the defense.
Defense Strategy: The attorney will develop a defense strategy tailored to the specific circumstances of the case based on the findings of the investigation. This may involve challenging the evidence, arguing against the validity of the charges, or negotiating a plea bargain if appropriate.
Negotiations: In some cases, the attorney may engage in negotiations with federal prosecutors to seek a reduction in charges, penalties, or sentencing. They will advocate on behalf of their clients and present any mitigating factors that may influence the outcome of the case.
Court Representation: If the case goes to trial, the attorney will represent their client in court. They will present the defense strategy, cross-examine witnesses, challenge the prosecution’s evidence, and make persuasive arguments to the judge or jury.
Compliance Assistance: In addition to defending against the charges, a tax evasion defense attorney may also provide guidance on ensuring future tax compliance. They can help clients understand their tax obligations, navigate complex tax laws, and implement proper accounting practices to avoid legal issues in the future.

Overall, a federal tax evasion defense attorney plays a crucial role in protecting the rights and interests of individuals or businesses accused of tax evasion. They provide legal expertise, conduct investigations, develop defense strategies, negotiate with prosecutors, and represent their clients in court, working towards achieving the best possible outcome in the case.

Given the complexity and significance of these cases, federal tax evasion defense attorneys typically have substantial experience in this area of law. Our defense attorneys are admitted to practice in federal court and have previously represented clients charged with federal tax evasion crimes for over three decades. Our attorneys have the experience and knowledge to provide the best possible defense of these charges.

To schedule a Strategy Session with an experienced federal tax evasion attorney, contact the Attorneys For Freedom today. We can be reached online at AttorneysForFreedom.com or by calling our Arizona office at 480-755-7110 or our Hawai’i office at 808-647-2423.