What to Expect if You’re Charged with Tax Evasion in San Francisco
What to Expect if You’re Charged with Tax Evasion in San Francisco
Getting charged with tax evasion can be really scary. Even if you feel like you didn’t do anything wrong, the government thinks you broke the law. And they can come at you with some pretty serious penalties if you’re found guilty.
But don’t panic! Just because you’re being charged doesn’t mean you’ll automatically be found guilty and sent to prison. There’s still a legal process to go through first.
I wrote this article to help walk you through what to expect if you’ve been charged with tax evasion in San Francisco. I’ll go over the typical process, what penalties you could face, and some defense strategies that could help.
First, let’s talk about what tax evasion even is. Basically, it’s when you intentionally try to avoid paying taxes that you owe. There’s a few main ways this could happen:
- Not reporting income – For example, if you get paid cash under the table and don’t tell the IRS
- Inflating deductions – Claiming fake business expenses to lower your taxable income
- Hiding money offshore – Not reporting foreign bank accounts or assets
In San Francisco recently, there’s been some high-profile tax evasion cases in the news. For example, a tech executive named Aubrey Shelton was charged with evading over $900,000 in taxes on money he allegedly embezzled from his company.
Another case involved the former head of San Francisco’s Building Inspection Commission, Rodrigo Santos. He pleaded guilty to not reporting over $1.6 million in income on his tax returns.
The charges in these cases included felony tax evasion. This is what happens at the federal level when the amount of tax evaded is over $10,000 in a single year. If it’s under $10,000, it may just be a misdemeanor tax fraud charge instead.
If you’re charged with tax evasion, the first thing that will probably happen is you’ll be arrested. The IRS Criminal Investigation division will work with local law enforcement to take you into custody.
After your arrest, you’ll be booked and fingerprinted at the local police station. Then you’ll have an initial appearance before a judge within 24 hours. This is where you’ll be informed of the charges against you and your rights.
Most likely, you’ll be released on bail until your trial. But the judge could decide to hold you in jail if they think you’re a flight risk.
Hiring a Lawyer
After you’re arrested and charged, it’s important to immediately hire a criminal tax defense lawyer. An experienced attorney will be able to guide you through the process and build the strongest defense for your case.
When looking for a lawyer, you’ll want to find someone with extensive knowledge of tax law. It would be best if they also have a track record of successfully defending tax evasion cases. Be sure to ask about their experience and credentials.
You may also want to find an attorney who specializes in negotiating with the IRS. They may be able to work out a settlement with the IRS before your case goes to trial. This could potentially get the criminal charges dropped.
Your Defense Strategy
Your lawyer will determine the best defense strategy for your specific situation. But there are a few common ways they may defend tax evasion charges:
- You lacked criminal intent – For a tax evasion conviction, prosecutors must prove you willfully violated tax law. Your lawyer could argue you simply made a mistake or negligence on your taxes, not a purposeful attempt to defraud.
- You relied on a professional – If you hired an accountant who improperly prepared your tax returns, your lawyer may claim you reasonably relied on their expertise.
- You have an innocent explanation – For example, if you had money in an offshore account, you could argue it was for a legitimate purpose like an international business. Or if you failed to report cash income, you may claim it was a gift, loan, or other non-taxable source of funds.
Essentially, your defense will aim to provide reasonable doubt that you acted with criminal intent. Your lawyer may also try to get evidence or charges dismissed on technicalities if possible.
Many tax evasion cases end up settling through plea bargaining before going to trial. This involves negotiating a plea deal with prosecutors.
In a plea deal, you plead guilty to some or all of the charges in exchange for a more lenient sentence. The judge does not have to accept the deal, but usually agrees to the negotiated terms.
Plea deals allow both sides to avoid the expense and uncertainty of a trial. Prosecutors are often open to bargaining because it guarantees a conviction. And for defendants, it provides more control over the penalty.
Make sure you discuss any plea offers thoroughly with your lawyer before accepting. Consider the sentencing differences between the deal and losing at trial.
If a plea deal can’t be reached, your case will go to trial. Tax evasion trials are heard by a judge and jury in federal court.
The IRS and federal prosecutors have the burden of proving your guilt beyond a reasonable doubt. A tax trial can be a long, complex process with witnesses called, evidence presented, and arguments made by both sides.
Some key questions the jury will have to decide include:
- Did you fail to report income, inflate deductions, or hide assets offshore?
- If so, did you do this intentionally, or was it an accident?
- How much tax did you evade?
Your lawyer will vigorously defend you and try to create reasonable doubt around these issues. But the final verdict will come down to the jury.
Potential Penalties if Convicted
If you’re convicted of tax evasion, either through a guilty plea or at trial, you’ll face serious penalties. These can include:
- Prison time – Up to 5 years in prison for each count of tax evasion. The amount of unreported income and taxes owed impacts the sentence length.
- Fines – Up to $100,000 per count, plus the costs of prosecution.
- Probation – Up to 3 years of supervised release after leaving prison.
- Restitution – Having to repay the IRS all the taxes you evaded, plus interest and penalties.
You may also face forfeiture of assets, like money and property, tied to the tax evasion. And you’ll have a federal felony conviction on your record, which can impact future employment, finances, and more.
Avoiding Jail Time
Is it possible to avoid prison if convicted of tax evasion? In some cases, yes. The judge may sentence you to probation instead of jail if:
- You took a plea deal with prosecutors recommending probation.
- The amount of taxes evaded was on the smaller side.
- You have no prior criminal history.
- You fully cooperated with the IRS investigation.
- You have health issues or family circumstances where incarceration would cause significant hardship.
However, you’ll still have to pay all back taxes plus steep penalties. And you’ll be on probation, which involves close supervision.
Being charged with tax evasion in San Francisco is a very serious matter with potentially life-changing consequences. But an experienced tax attorney can help develop the best defense for your specific situation. There are also opportunities along the way to negotiate a settlement or plea deal to reduce penalties.
Don’t wait to seek legal counsel if you’re contacted by the IRS Criminal Investigation division. And going forward, make sure you fully comply with tax laws and reporting requirements.
With the right legal strategy, even tax evasion charges don’t automatically mean you’ll serve time in prison or face financial ruin. But it’s critical to have knowledgeable tax representation on your side.