What Happens if You’re Charged with Tax Evasion

What Happens if You’re Charged with Tax Evasion

Being accused of tax evasion can turn your life upside down. These felony charges can lead to years in prison, massive fines, and destroy careers and reputations. It’s normal to feel scared and overwhelmed if charged with tax evasion. But understanding the process and potential outcomes can help you navigate this ordeal.

This article provides an overview of what to expect if you are charged with tax evasion. We’ll look at the investigation process, criminal charges, plea bargains, trials, penalties if convicted, and tips for finding the best legal defense.

Tax Evasion Investigations

Tax evasion charges typically originate from an investigation by the IRS Criminal Investigation Division. Investigations often start due to[1]:

• Tips from informants
• Discrepancies or odd patterns in tax returns
• Audits that uncover potential fraud

Investigators gather evidence by interviewing witnesses, reviewing documents, analyzing financial records, and executing search warrants. If they find clear evidence of intentional tax evasion, they will recommend prosecution.

Criminal Tax Evasion Charges

Prosecutors will bring formal criminal charges if the evidence shows “willful” tax evasion beyond reasonable doubt. The two main criminal tax charges are[2]:

• Tax Evasion – Knowingly underpaying taxes through deceit, concealment, or other fraud.
• False Tax Return – Deliberately filing a false or misleading return.

Both are felonies with substantial penalties. Prosecutors may stack multiple counts based on multiple years of evasion.

Hiring a Tax Defense Lawyer

Upon learning you are under investigation or charged, immediately retain a criminal tax defense lawyer. Look for an experienced attorney with a proven record of getting tax evasion charges dismissed pre-trial or negotiating favorable plea bargains.[3]

A skilled tax lawyer can often prevent charges from ever being filed if engaged during the investigation phase.

Plea Bargain Deals

Many tax evasion cases end in plea bargains to avoid the risk of trial. Typical components of a tax evasion plea deal include[4]:

• Pleading to a misdemeanor tax fraud charge
• Probation but no prison time
• Paying back taxes owed
• Paying fines and penalties

While pleading guilty carries consequences, plea deals provide more certainty than facing trial.

Criminal Tax Trials

Tax evasion cases that don’t reach a plea deal go to trial. The prosecution must prove beyond reasonable doubt that[5]:

• There was an additional tax due and owing
• The defendant intended to evade taxes
• An affirmative act was committed to evade taxes

Your lawyer will attempt to undermine the prosecution’s case and create reasonable doubt.

Penalties if Convicted

Potential penalties if convicted of tax evasion include:

• Prison – Up to 5 years per count[6]
• Fines – Up to $100,000 per individual, $500,000 per corporation[6]
• Restitution – Repayment of taxes plus interest and penalties
• Asset forfeiture – Seizure of property obtained through evasion

Judges have discretion in sentencing but often impose the maximum. Other consequences can include loss of professional licenses and reputation harm.

Avoiding Common Missteps

Never try justifying your actions or denying responsibility to investigators. Admitting guilt can sink your chances of a good plea deal or acquittal.[3]

Let your lawyer communicate with investigators – don’t talk to them without counsel present.

Takeaways

Tax evasion charges merit aggressive legal defense from an experienced tax attorney. But even if convicted, skilled counsel can often negotiate much lighter sentences than the absolute maximums. Don’t despair if charged – fight the allegations at every step.