Criminal Tax Fraud in the Fifth Degree: NY Tax Law 1802

New York’s voluminous tax code includes a number of different criminal provisions in addition to civil penalties that can be levied against those who refuse to comply. One of the most commonly charged crimes is criminal tax fraud in the fifth degree. Included in New York Tax Law section 1802, criminal tax fraud in the fifth degree occurs when a person commits a criminal tax fraud act. Given that there are five degrees of tax crimes under New York law, this is the least serious. That doesn’t mean that defendants are in the clear, though. Tax fraud in any degree has serious consequences. Those accused should find a good lawyer.

Statutory Language for Fifth Degree Tax Fraud

Criminal tax fraud in the fifth degree has a simple definition with more complicated consequences. The law simply states that a person commits this crime at this level when he or she commits a tax fraud act. The code provides many examples of things that constitute a tax fraud act. Failing to sign any writing required by the tax code or causing another person to fail to sign a writing is a fraudulent act. Falsely signing any tax document with an intent to defraud the state is a fraudulent act. These may seem like “process” crimes, but they are intended to keep people from abusing the self-reporting system that underpins the tax system.

In addition to the prohibitions against problems in reporting, tax fraud in the fifth degree also covers engaging in any scheme designed to defraud the state of any revenue which it is due. Failing to pay any tax that is due also qualifies as a tax fraud act. The statute is necessarily broad so that it can cover a huge amount of wrongful conduct. Some consider it to be a catch-all that can be used to criminalize conduct that goes against the spirit of the tax code and the state’s tax collection scheme.

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Legal Scenario: What Would You Do?

Scenario

The IRS has referred your case to the Criminal Investigation Division after an audit uncovered discrepancies in your tax returns.

Is this different from a regular audit?

Attorney's Answer

A CID referral means the IRS believes there may be criminal tax fraud, not just civil underpayment. Criminal tax charges carry prison time of up to 5 years per count. You need a criminal defense attorney at this stage.

This is general information only. Contact us for advice specific to your situation.

Liability for Third Parties

One of the most important elements of criminal tax fraud in the fifth degree is the liability it places on third parties. In addition to holding responsible those who make material false statements and fail to live up to their duties under the law, it makes it illegal to assist another or direct another in doing so. Ideally, this puts the onus on lawyers, accounting professionals, and tax advisers who fail in their duty and push unlawful conduct. The law thus becomes something of a backstop to encourage professionals to be both vigilant and careful in their advisement and reporting.

Requirement of Knowing Conduct