Tax evasion is a serious white collar crime at both the federal and state level. If you are suspected of tax evasion or fear you might be, it is important that you know the key elements of a substantial tax evasion charge and your defense options. In this blog, we will discuss what constitutes a case of tax evasion and how you might defend against a tax evasion charge.
What Is Tax Evasion?
Tax evasion refers to the willful and intentional attempt to evade paying required taxes, whether underpaying or engaging in fraud when dealing with taxes. Be aware that mistakes and carelessness are not grounds for a tax evasion charge; in order to be convicted of tax evasion, the IRS must show that you intentionally and purposefully acted to hide your taxable assets.
Penalties for Tax Evasion
A federal tax evasion conviction may result in up to 5 years in jail, and the term may be enhanced if there were multiple counts of tax evasion or if it was a repeated offense. In addition to jail time, a person guilty of tax evasion could also face substantial fines up to $250,000 for individuals and $500,000 for corporations.
Some tax fraud cases can also lead to court orders requiring the defendant to pay for any restitution that they benefited from, and the courts may sentence a person to probation usually lasting at least 1-3 years.
On a state level, those guilty of tax evasion can face different penalties depending on the amount of taxes they’ve evaded. $301-$20,000 in taxes evaded is a 3rd degree felony punishable by up to 5 years in prison and/or $5,000; $20,001-$100,000 in taxes evaded is a 2nd degree felony that carries up to 15 years in prison and/or $10,000 in fines; and tax crimes valued above $100,000 can be penalized as a 1st degree felony with 30 years in prison and/or $10,000 in fines.
Defending Against a Tax Evasion Charge
If you have been charged with tax evasion, you have a few different defense tactics you could pursue. As a tax evasion conviction requires the element of willfulness, you could argue that you lacked willful intent in your tax fraud case. After all, people make mistakes. If you file your own federal income taxes, it can be easy to mistakenly file your tax return incorrectly. You might also not have realized that certain income, such as lottery winnings or freelancing income, must be reported to the IRS, thus unintentionally underreporting your income.
Note that there is a fine line with this argument, as a mistake argument is if you are mistaken about what day taxes are due or what exactly needs to be reported, but it will not be a valid defense if you simply claim that you didn’t know you needed to file taxes. An experienced attorney can help you better navigate this gray area as you craft your defense.
Another option to fight a tax evasion charge could be demonstrating that you were not the one who filed your tax return or that you were advised to make certain choices by an external tax preparer, who supplied you with wrong or illegal guidance that you didn’t know about.
Recall that in order to be found guilty of tax evasion, the court must prove beyond a reasonable doubt that you intentionally defrauded the IRS to avoid paying your taxes. If you cannot prove that you made a mistake or that a financial advisor misadvised you, you can potentially defend your case by claiming the lack of evidence showing your intent to defraud the IRS.
There are also cases in which an individual may have expenses that reduce their tax liability. In other words, even if you are deemed to have intentionally underreported your income or otherwise evaded the taxes you were required to pay, you could demonstrate that you have expenses you did not report that reduced your tax liability to zero. It will be best to hire an attorney at this point who can assess your financial history and prove this effectively in court.
Note that Florida also has a statute of limitations to file a charge of tax evasion lasting 6 years. Once this time period passes, the IRS cannot file a tax evasion suit even if they have sufficient evidence.
Seek Legal Representation Immediately
If you feel you are suspected of tax evasion, speak with an attorney immediately. The consequences for a tax evasion conviction can be serious, depending on the amount of taxes owed. An attorney at Hubbs Law, P.A. can assess your financial history and the facts of your tax situation to determine the most effective defense strategy to move forward with your tax defense, whether on a state or federal level.
Contact us at Hubbs Law, P.A. to schedule your case evaluation today.
Please note that by reading this blog you are not entering into an attorney-client relationship with Hubbs Law, P.A. This blog only provides general legal information. Every case is unique and you should request a consultation to ensure that you are getting the correct legal advice for your specific case.