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Fighting Federal Tax Evasion Charges in the Southern District of New York
Fighting Federal Tax Evasion Charges in the Southern District of New York
Being charged with tax evasion by the federal government is no joke. The stakes are high, with potential penalties including heavy fines and years behind bars. If you’ve been accused of tax evasion in the Southern District of New York (SDNY), you need an experienced legal team on your side.
The SDNY, which covers Manhattan, the Bronx, Westchester, Putnam, Rockland, Orange, Dutchess, and Sullivan counties, is known for aggressively pursuing tax evasion cases. Home to Wall Street and many wealthy individuals and corporations, the SDNY prosecutes more tax crimes than any other U.S. Attorney’s office. Top targets include high-net-worth individuals, financial institutions, and large corporations accused of hiding income and assets offshore.
Common Tax Evasion Charges in SDNY
There are a few main laws federal prosecutors use to go after alleged tax evaders in the Southern District of New York:
- Tax Evasion (26 U.S.C. § 7201) – This felony charge applies when there is intentional attempt to evade paying taxes through actions like concealing income, keeping double sets of books, claiming personal expenses as business deductions, or hiding assets and income offshore.
- Filing a False Return (26 U.S.C. § 7206) – It’s a felony to willfully provide false or fraudulent information on a tax return signed under penalties of perjury. Even small mistakes can lead to charges if intent to deceive can be proven.
- Failure to File a Tax Return (26 U.S.C. § 7203) – A misdemeanor charge brought when a person required to file a return intentionally fails to do so by the filing deadline. Jail time is rare but repeat offenders may face felony tax evasion charges.
- Employment Tax Fraud (26 U.S.C. § 7202) – Businesses required to collect, account for, and pay over income taxes and FICA taxes to the IRS can be prosecuted for intentionally failing to do so.
Other charges like wire fraud, mail fraud, and money laundering may be tacked on if prosecutors can show intent to conceal financial transactions related to tax evasion.
Sentencing for Tax Evasion Convictions in SDNY
Potential penalties for federal tax crimes in the Southern District of New York include:
- Up to 5 years in prison and $250,000 in fines for each count of tax evasion or filing a false return
- Up to 1 year in prison and $100,000 in fines for failure to file a tax return
- Restitution for all unpaid taxes, interest, and penalties
- Forfeiture of property connected with tax evasion schemes
Judges have wide discretion in sentencing, taking into account factors like:
- Total amount of tax loss to the government
- Duration of the evasion or false filing scheme
- Defendant’s level of sophistication and education
- Abuse of position of trust like accountant or financial advisor
- Past history of tax non-compliance
- Health conditions, family circumstances, charitable works, etc.
In high-profile cases with multi-million dollar offshore tax evasion schemes, SDNY judges have imposed sentences of 5-10 years in federal prison and over $10 million in penalties.
Fighting Tax Evasion Charges: Possible Defenses
In tax cases, the burden of proof is on the government to show beyond a reasonable doubt that you intentionally violated tax laws. Some possible defenses include:
- Lack of intent – Arguing you did not willfully intend to break tax laws but made an honest mistake or had a good faith misunderstanding.
- Reliance on professional advice – Demonstrating you disclosed all relevant information to a tax expert and reasonably relied on their guidance about what was legal.
- Unrealistic valuation – Fighting inflated asset valuations if the tax loss amount is based on subjective estimates of worth rather than concrete figures.
- Statute of limitations – Federal tax charges must be brought within 6 years of an alleged crime so fighting dates and timelines can get charges dismissed.
- Constitutional violations – Challenging how evidence was obtained by prosecutors, such as violations of due process rights, illegal search and seizure, self-incrimination, etc.
In complex tax cases, you want an experienced white collar criminal defense lawyer who understands tax code intricacies. They can carefully analyze the prosecution’s approach to spot potential weaknesses.
Avoiding Criminal Tax Charges: Voluntary Disclosure
If you failed to report income or pay taxes in the past, you may be able to avoid criminal prosecution through the IRS Voluntary Disclosure Program. This involves promptly:
- Filing amended returns and paying back taxes, interest, and penalties
- Disclosing the nature and extent of past non-compliance
- Cooperating fully going forward by reporting foreign assets, paying future taxes, etc.
In exchange, the IRS agrees not to recommend criminal prosecution. However, the Voluntary Disclosure Program has become stricter, especially for willful and egregious acts of tax evasion. Consulting an experienced tax attorney is highly recommended before taking this step.
Work with a Top SDNY Tax Evasion Lawyer
Facing criminal tax charges in the Southern District of New York is frightening. But an experienced federal tax defense attorney can thoroughly evaluate the prosecution’s case, identify defenses, negotiate with prosecutors, and develop an aggressive trial strategy. Don’t go it alone against the SDNY’s top tax crime unit. Work with a top NYC tax evasion lawyer to protect your future.
References
https://www.irs.gov/compliance/criminal-investigation/voluntary-disclosure-practice