What are common defenses for tax evasion?

Fighting Back Against Tax Evasion Charges: A Plain English Guide

Hey there! Dealing with tax evasion charges? I feel you. The IRS can seem scary when they come after you with criminal tax charges. But don’t panic! As someone who’s gone through this and come out the other side, I wanted to share some insider tips on understanding defenses for tax evasion. I’m not a lawyer, but I’ll walk through some of the most common strategies I’ve seen work to fight these cases. The goal here is to break down the basics in plain English so even non-lawyers can understand how to protect themselves. Ready? Let’s do this!

You Made an Honest Mistake

One of the top defenses for tax evasion is showing it was just an honest mistake, not intentional cheating. With complex tax laws, errors happen. Things like:

• Misunderstanding what counts as income
• Not knowing certain deductions don’t apply
• Making math errors on forms
• Forgetting to include certain income sources

As long as you correct mistakes and pay what you actually owe, an honest error normally isn’t criminal tax evasion.

You Had a Legitimate Interpretation

Another solid defense is having a legitimate rationale for your tax position. If it was a reasonable interpretation of unclear tax law, that defeats criminal charges. Things like:

• Thinking an expense was deductible
• Believing a tax credit applied to you
• Interpreting ambiguous tax code provisions

Even if your reading was wrong, having a legitimate basis helps show it wasn’t intentional cheating.

No Intent to Deceive

A key element of criminal tax evasion is willfully intending to deceive the IRS. If you can show there was no intent to mislead, it defeats charges. Proving things like:

• You were upfront about the questionable tax position
• You didn’t try to conceal anything from the IRS
• You reasonably thought your tax position was proper

No deception = no tax evasion. It’s about fraudulent intent, not just being wrong.

Reliance on a Tax Professional

Many people reasonably rely on tax pros like CPAs and accountants when filing. Their advice can give you justification. But beware:

• The advice has to come from a competent tax pro
• You fully disclosed all relevant facts to them
• You actually relied on and followed their advice

Having a qualified tax pro’s blessing helps show you weren’t willfully cheating.

Lack of Financial Motive

Cheating on taxes is usually motivated by greed – illegally sheltering income to avoid paying tax. If you can demonstrate a lack of financial motive, it helps fight willful evasion. Things like:

• Not realizing tax benefits from the position
• Taking a position that results in overpayment
• Having losses that offset any unpaid tax

No money saved = no tax evasion. Financial motive is key.

You Tried to Comply in Good Faith

Efforts to comply with the tax laws, even if you got it wrong, help show good faith. Things like:

• Seeking advice from tax experts
• Disclosing questionable positions to the IRS
• Attempting to follow complex IRS rules
• Cooperating fully with tax audits

While you may still owe penalties for mistakes, it shows you weren’t willfully cheating.

Lack of Knowledge of Duty to File/Pay

You can fight tax evasion by claiming you didn’t know about legal duties like:

• Requirement to file a return
• Obligation to report certain income
• Responsibility to pay taxes

But this defense has risks. Claiming ignorance of basic tax duties sounds fishy and often backfires.

You Were Unable to File/Pay

While inability to file or pay doesn’t make the tax go away, it helps fight willful evasion. Reasons like:

• Financial hardship left you unable to pay
• Disability or illness prevented filing
• Lack of access to tax records due to circumstances

Inability defenses face scrutiny over whether you really couldn’t file/pay versus just chose not to.

No Tax Deficiency Exists

There’s no tax evasion if no taxes were actually owed. You may be able to show:

• No taxable income despite IRS charges
• Legitimate deductions offset any unpaid tax
• Tax credits eliminate any balance due

No deficiency = no tax evasion. Make them prove you actually owed taxes.

Statute of Limitations Expired

The IRS generally must assess tax within 3 years of a return being filed. If they didn’t catch the issues in time, the statute of limitations prevents charges. But watch out for exceptions if you:

• Never filed a return
• Substantially underreported income
• Made fraudulent filings

If the statute of limitations has legitimately expired, it can bar tax evasion charges.

Illegal Search and Seizure

Like with other crimes, how evidence was obtained matters. If the IRS violated your rights by things like:

• Seizing records without a warrant
• Coercing you to produce documents
• Violating attorney-client privilege

Illegal IRS conduct can nullify the evidence gathered and undermine the evasion case.

Sentencing Leniency

If convicted of tax evasion, admitting fault and cooperating with the IRS may help reduce your sentence. Strategies include:

• Pleading guilty and accepting responsibility
• Expressing remorse to the judge
• Providing restitution for unpaid taxes
• Assisting the IRS in related investigations
• Highlighting charitable works and good character

While it feels lousy begging for mercy, appealing to the judge’s compassion is often your best bet if facing years behind bars.

Attacking the Evidence

Even if evidence was lawfully obtained, there may still be grounds to challenge it. Look for things like:

• Incomplete or inconclusive records
• Inadmissible hearsay used against you
• Evidence that lacks authentication
• Unqualified experts used to analyze records
• Unsupported conclusions drawn from data

Picking apart the IRS’s evidence and exposing flaws weakens their case.

Bottom Line

Battling tax evasion charges is daunting, but not hopeless. With an experienced tax attorney and the right defense strategy, many cases can be dismissed or plea bargained down to reasonable outcomes. Don’t assume you’re doomed. Protect your rights and make them work to build their case against you.

Stay strong, get organized, and know there are options to defend yourself. I hope these tips give you a starting point to push back on tax evasion allegations. We’ve got to stick together against IRS overreach. Let me know if you have any other questions!