26 Nov 23

Federal Tax Evasion and IRS Defense Lawyers

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Last Updated on: 5th December 2023, 02:11 pm


Federal Tax Evasion and IRS Defense Lawyers

Tax evasion, or tax fraud, refers to illegally avoiding or falsifying tax documents to defraud the Internal Revenue Service (IRS). Going up against the IRS is challenging, so an experienced white collar defense lawyer could significantly impact the outcome of your case. A lawyer can raise pretrial motions and employ common defenses like inadequate evidence, good faith reliance on an accountant, or no tax due.

Section 7201 of the Internal Revenue Code specifically addresses attempts to evade or defeat taxes. The IRS must prove beyond reasonable doubt that you owed taxes, you knew you owed taxes, and you intentionally attempted to evade paying taxes. Penalties include fines up to $100,000 and imprisonment up to 5 years. The IRS treats tax evasion as a felony, so these are serious charges that require an aggressive defense.

An experienced tax evasion defense lawyer knows that IRS investigations come in two forms – administrative and grand jury. Administrative investigations allow the IRS to issue summons and require you to provide documents and testimony. With grand jury investigations, the Department of Justice issues subpoenas for financial records and testimony. Your lawyer can help avoid legal pitfalls in both types of investigations. As Judge Learned Hand once said, “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.”

When facing criminal tax charges, selecting an experienced tax fraud defense lawyer is crucial. A knowledgeable attorney can analyze if the IRS has adequate evidence of an underpayment, if you had a good faith reliance on an accountant’s advice, or if you legally owed no tax. Your lawyer may also argue Constitutional violations of due process or illegal search and seizure. The stakes are high, so you need an aggressive defense team in your corner.

Federal Tax Fraud Crimes

Beyond general tax evasion, there are several other federal tax crimes:

  • Tax Evasion [26 U.S.C. § 7201]: Knowingly and willfully underreporting income or falsifying deductions to illegally reduce tax liability.
  • Willful Failure to File Return, Supply Information, or Pay Tax [26 U.S.C. § 7203]: Failure to file a return, provide required information, or pay taxes due to the IRS.
  • Fraud and False Statements [26 U.S.C. § 7206]: Knowingly making false statements on tax returns, financial documents, or other IRS forms.
  • Conspiracy [18 U.S.C. § 371]: Agreeing with others to commit tax crimes like evasion, false returns, or obstructing the IRS.
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The IRS treats these as felonies with steep penalties. For tax evasion, you face up to 5 years in prison and a $250,000 fine. Even simple failure to file carries a 1 year prison sentence and $100,000 fine. Conspiracy raises the stakes to 5 years and $250,000. Only an experienced tax fraud defense lawyer can help avoid these dire outcomes.

Sentencing Considerations in Tax Crimes

If convicted of tax evasion, your punishment will depend on the amounts involved and other factors. The Sentencing Guidelines provide direction, but judges have discretion. The court will consider evidence from both sides regarding:

  • The total tax loss to the government.
  • Whether sophisticated means were used.
  • Your role as a leader/organizer.
  • Obstruction attempts.
  • Acceptance of responsibility.

An experienced tax fraud defense lawyer will advocate for the lightest sentence possible through sentencing memoranda, expert testimony, and other evidence.

Tax Fraud Investigations Often Lead to Civil Tax Disputes

Be aware that defeating criminal tax fraud allegations does not end the fight. The IRS often pursues civil tax assessments in addition to criminal charges. The fraud penalties in civil tax audits are extreme – up to 75% of the unpaid tax. Civil and criminal tax cases share similar issues, so information obtained in one proceeding may be used in the other. Retaining a tax attorney experienced in both criminal and civil tax litigation is advised. This dual expertise allows them to craft a cohesive defense strategy.