Criminal Defense Lawyers

Decoding Louisiana’s Sentencing Guidelines for Tax Evasion Offenses

Decoding Louisiana‘s Sentencing Guidelines for Tax Evasion Offenses

According to the Louisiana Department of Revenue, tax evasion is “the willful attempt to evade or defeat a tax imposed by [the state tax code] or the payment thereof.”18 In plain English, it means deliberately underpaying or not paying your state taxes through fraudulent means. Some common examples of tax evasion include:13

• Failing to file a state tax return when you know you owe taxes
• Significantly underreporting your income on your tax return
• Claiming false deductions or credits you’re not entitled to
• Hiding taxable income or assets from the state

So how serious are the potential penalties for tax evasion in Louisiana? In short, very serious. Tax evasion is considered a felony offense.1 If convicted, you could be facing:18

• Fines up to $100,000 for individuals or $500,000 for corporations
• Up to 5 years in prison
• The costs of prosecution on top of any fines

Yikes, definitely not a slap on the wrist. But the exact penalties in any given case will depend on the specific facts and circumstances. Louisiana uses a set of sentencing guidelines to help judges determine the appropriate sentence within the ranges allowed by law.

Factors That Impact Sentencing

There are a number of aggravating and mitigating factors that a judge will consider when deciding on a sentence for tax evasion. These include:17

Amount of Tax Evaded

In general, the higher the dollar amount of taxes evaded, the more severe the potential penalties.17 For example, if you failed to pay $5,000 in taxes, you‘d likely face a lighter sentence than someone who evaded $500,000 in taxes. The Louisiana sentencing guidelines break tax losses into different levels, with progressively higher offense levels for larger amounts:17

• Tax loss under $2,500 = Offense Level 6
• $2,500 – $6,500 = Offense Level 8
• $6,500 – $15,000 = Offense Level 10
• $15,000 – $40,000 = Offense Level 12
• $40,000 – $100,000 = Offense Level 14
• $100,000 – $250,000 = Offense Level 16
• $250,000 – $550,000 = Offense Level 18
• $550,000 – $1,500,000 = Offense Level 20
• $1,500,000 – $3,500,000 = Offense Level 22
• $3,500,000 – $9,500,000 = Offense Level 24
• $9,500,000 – $25,000,000 = Offense Level 26
• $25,000,000 – $65,000,000 = Offense Level 28
• $65,000,000 – $150,000,000 = Offense Level 30
• $150,000,000 – $250,000,000 = Offense Level 32
• $250,000,000 or more = Offense Level 34

The offense level is then used in a sentencing table to determine the recommended prison term, which I‘ll explain more later on.

Sophistication of the Scheme

If the tax evasion involved a highly complex or sophisticated scheme, that will likely increase the severity of the sentence.17 Examples could include using offshore accounts, shell companies, or complicated accounting tricks to hide income. A basic failure to file or underreporting of income would be considered less sophisticated.

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2024-03-18

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2024-03-15

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Role in the Offense

If you were the ringleader or organizer of a tax evasion scheme involving multiple people, expect a harsher sentence than a “minor participant.”17 For example, a business owner who directed his employees to help him hide income would face stiffer penalties than the low-level employee just following orders.

Obstruction of Justice

If you engaged in any efforts to obstruct the IRS investigation, that’s a big no-no that will be factored into sentencing.17 We‘re talking things like lying to investigators, destroying records, or encouraging others to lie on your behalf. Come clean from the start to avoid digging yourself into a deeper hole.

Acceptance of Responsibility

On the flip side, if you quickly fess up, plead guilty, and show remorse, you may get a slightly reduced sentence.17  The judge wants to see that you’re taking responsibility and not wasting everyone‘s time with a frivolous defense when you know you’re guilty.

Criminal History

Like with most crimes, having a prior criminal record – especially a history of tax offenses – will lead to a longer sentence.17  First-time offenders with an otherwise clean record will typically get more leniency. But if you’re a repeat tax evader, expect to face some serious time.

Putting It All Together

Okay, so how do all these factors come together to determine the ultimate sentence? It‘s honestly a bit complicated, but I’ll do my best to explain in plain English. Basically, the judge will first determine the “base offense level” for the crime by looking at the amount of the tax loss in the table I mentioned earlier.17 For example, a tax loss of $100,000 starts at offense level 16. Then the judge will add or subtract points from that base offense level depending on the presence of any aggravating or mitigating factors.17  The aggravating factors I discussed above add points, while the mitigating factor of accepting responsibility subtracts points. Once the final offense level is calculated, the judge turns to a sentencing table to determine the recommended sentence.17 The table has two axes – the offense level on one side, and the defendant’s criminal history category on the other. Where those two intersect shows the recommended sentence range in months.Here’s a snippet of the sentencing table to give you an idea:17

So for example, let‘s say a defendant evaded $150,000 in taxes, which is a base offense level 16. He was the organizer of the scheme which adds 4 points, but he also quickly accepted responsibility which subtracts 2 points. His final offense level is 18. With no prior criminal history, the recommended sentence would be 27-33 months based on the table. But keep in mind, these are just guidelines, not mandatory sentences. The judge has discretion to deviate up or down based on unique circumstances.17 A good criminal defense lawyer may be able to argue for a below-guidelines sentence. Which brings me to my next point…

Importance of Legal Representation

If you’re facing tax evasion charges, I can’t stress enough how crucial it is to have an experienced criminal tax attorney in your corner. This isn’t some minor traffic ticket you can handle on your own. You‘re looking at a felony conviction and potential prison time. An attorney who specializes in these types of cases will know the ins-and-outs of the system and how to mount the best possible defense.Some key things a good tax evasion attorney can do:4

• Carefully review the evidence against you to spot any holes or weaknesses in the prosecution’s case. The government has the burden to prove guilt beyond a reasonable doubt.
• Determine if any of your constitutional rights were violated during the investigation, which could get key evidence thrown out. For example, if investigators searched your property without a proper warrant.
• Negotiate a plea deal with the prosecutor for reduced charges or a lighter sentence, if going to trial isn’t in your best interest. The vast majority of criminal cases end in plea bargains.
• Gather evidence and put on a vigorous defense at trial, poking holes in the government’s arguments and presenting your side of the story to the jury.
• If convicted, argue for the lowest possible sentence by highlighting mitigating factors and presenting character witnesses on your behalf.

Don’t just go with the first lawyer you find on Google. Look for attorneys who have specific experience handling federal tax evasion cases, preferably ones who are also CPAs or have an accounting background.4 Read reviews, ask for referrals, and meet with a few different lawyers before deciding who to hire. Most criminal defense attorneys offer free initial consultations, so it doesn’t cost anything to get some preliminary advice on your case.4 Don‘t wait until charges have already been filed to lawyer up. If you even suspect you’re under investigation for tax evasion, consulting with an attorney right away can help you avoid making any incriminating statements or mistakes that could come back to bite you later on.

Potential Defenses to Tax Evasion Charges

So what are some possible defenses your lawyer may raise if you’re charged with tax evasion? While every case is different, here are a few common ones:14

Lack of Willfulness

Remember, tax evasion requires the intentional or willful attempt to avoid paying taxes you know you owe.1 If your failure to pay was due to an honest mistake, ignorance of the law, or reliance on a tax professional‘s advice, that could negate the willfulness element.4 For example, let’s say you used a cut-rate tax preparer who made errors on your return that understated your income. If you can show you provided that person with accurate information and had no reason to suspect anything was amiss, that‘s a strong defense to tax evasion charges. The burden is on the government to prove willfulness beyond a reasonable doubt.

Lack of a Tax Deficiency

There’s no tax evasion if there’s no tax actually owed.1 In some cases, the IRS’s calculation of what you owe may be incorrect. Your attorney can hire forensic accountants to comb through your finances and potentially show that your tax liability was accurately reported after all. No tax deficiency, no crime.

Statute of Limitations

The statute of limitations for tax evasion charges is typically six years from the date the false return was filed or the taxes were due.4 If the IRS waits too long to bring charges, your lawyer can argue they are time-barred and must be dismissed. However, in some cases the statute of limitations may be extended, so don’t assume you’re in the clear just because a few years have passed.

Constitutional Violations

As I mentioned before, if the IRS violated your constitutional rights during its investigation, any evidence obtained as a result may be suppressed.4 Common violations include illegal searches and seizures (4th Amendment), failure to read you your Miranda rights (5th Amendment), or contacting you without your lawyer present if you’ve invoked your right to counsel (6th Amendment).A good defense attorney will carefully scrutinize every aspect of the government‘s case to see if any of these issues are present. If key evidence is thrown out, that can seriously weaken the prosecution‘s case and may lead to charges being dismissed altogether.

Alternatives to Incarceration

Even if you are convicted of tax evasion, incarceration isn‘t necessarily a foregone conclusion. In some cases, alternative sentences may be available that can keep you out of prison. These include:4

Probation

For first-time offenders or those with minimal criminal history, a sentence of probation may be an option. This allows you to remain in the community under court supervision and subject to certain conditions, such as reporting to a probation officer, maintaining employment, and not committing any further crimes.4 Probation can be a great alternative to prison, but it’s not a walk in the park. Violating any of the conditions can land you back in front of the judge and potentially sent to jail.

Home Detention

Another possibility is serving your sentence on home detention or house arrest.4 This involves wearing an electronic monitoring device and being restricted to your home except for approved activities like work, school, or medical appointments. It’s a way to punish you while still allowing you to keep your job and family responsibilities.

Community Service

In some cases, a judge may order community service as part of your sentence or in lieu of incarceration.4 This involves volunteering a set number of hours at a non-profit organization or government agency. It’s a way to give back to the community while also avoiding the hardships of prison.

Restitution

Paying back the taxes you evaded, along with interest and penalties, can go a long way in showing the judge you‘re taking responsibility for your actions.4 In some cases, making full restitution may be a condition of a probationary sentence or could lead to a reduced prison term. However, coming up with that much money is easier said than done for most people. An experienced tax attorney can negotiate an installment agreement or offer-in-compromise with the IRS to make the payments more manageable.