Tax Fraud Lawyers
Having problems with tax reporting? We found out what is being done against you criminal tax investigation? Receive a subpoena based on tax fraud charges? Penalties can include multimillion-dollar fines and years in prison, so it is important to secure strong legal representation from an experienced attorney as quickly as possible to avoid the worst-case scenario.
Faced with accusations of criminal tax fraud? Our law firm specializes in comprehensive defense in major tax cases and helps minimize risks when interacting with regulatory authorities. Experienced tax fraud attorney will carefully analyze financial documentation, build a defense strategy and defend your interests at all stages of the investigation. Trust our experienced attorneys to protect your business and reputation.
What Exactly Is Tax Fraud?
Tax Fraud is an intentional and illegal act or omission aimed at concealing the actual tax liability and reducing the amount of taxes paid by deception or misrepresentation to regulatory authorities. The criminal goal is illegal financial gain that violates both state interests and the principles of fair competition in the business environment.
Sub category tax fraud The following actions apply:
- Falsification or falsification of reports: deliberate distortion of revenue, expenses and profit figures in accounting documents, manipulation of primary documents (income tax returns, invoices, invoices, receipts and others);
- Hiding or understating income: incomplete declaration of income of an individual or company, concealment of part of the turnover through “black” cash registers and unaccounted revenue;
- Illegal use of benefits: obtaining tax deductions for fictitious expenses or on the basis of forged documents, issuing false social or investment benefits that do not correspond to real expenses;
- Use of offshore schemes: creating a network of offshore companies to hide real beneficiaries and illegally optimize taxation, transferring profits to accounts in jurisdictions with low rates, while artificially creating expenses in a country with standard taxes.
Additionally, it is also worth understanding the difference between Tax Evasion и Tax Avoidance. Tax Evasion is a direct and intentional violation of tax laws, which is considered a criminal offense in most jurisdictions. Examples: concealment of income, distortion of reporting, falsification of documents.
Tax Avoidance is the legal use of gaps and benefits in tax legislation in order to reduce the tax burden. It is not generally considered a crime unless there are obvious elements of deception. Examples: registering a company in jurisdictions with a favorable tax regime, using schemes to optimize taxes in international transactions.
Tax Fraud violate state interests. Tax revenues form the basis of budget expenditures (social sphere, infrastructure, etc.), and their unfair reduction undermines the state financial balance. Participating in criminal tax fraud companies gain an unfair advantage over bona fide market participants. In many countries tax fraud is punishable not only by fines, but also by prison terms, which makes such acts extremely risky.
How Does the IRS Determine Tax Fraud?
The Internal Revenue Service, IRS, is a federal agency within the U.S. Department of the Treasury responsible for the administration, collection, and processing of taxes. income tax returns and monitoring compliance with tax legislation.
The IRS has the authority to audit taxpayers, issue orders for the payment of arrears, and conduct investigations into matters related to tax evasion or fraud.
The main tasks of the IRS:
- Tax collection: ensures the flow of funds into the US federal budget from individuals, corporations and other taxpayers;
- Verification and audit: Conducts random and targeted audits of tax reports, including cases of suspected violations;
- Investigation of violations: when identifying serious offenses and initiating criminal cases, cooperates with the Criminal Investigation Division.
To recognize an act tax fraud it is important to prove that the person knowingly and intentionally misrepresented information or evaded taxes. A simple mistake or oversight does not usually qualify as fraud.
The IRS considers a number of activities to be potentially fraudulent, such as concealing income and holding hidden accounts, intentionally inflating deductions and benefits, and falsifying books and checks. The key element is the desire to avoid paying legally established taxes for the purpose of personal or corporate gain.
If these common signs are not present, the IRS generally considers that an unintentional mistake due to negligence has occurred. Although this does not entail criminal prosecution for tax evasion, errors in payment may result in an inaccuracy penalty equal to 20 percent of the underpayment.
The IRS reviews tax returns to look for unusual or suspicious transactions (significant discrepancies in income, sudden changes in expenses, etc.).
The use of algorithms and software allows for effective search for anomalies and correlation in large data sets. If there is serious evidence, the case may be transferred to the Criminal Investigation Division, which has the right to initiate criminal cases and make arrests.
Are You at Risk of Facing Criminal Tax Fraud Charges?
The legislation in many countries is designed in such a way that even minor errors or omissions in reporting can arouse suspicion from the tax authorities. If regulatory authorities discover intentional distortions, this could lead to criminal prosecution for tax fraud.
If you systematically make “mistakes” in your declarations, understate income or hide significant amounts, control authorities may classify this as intentional tax evasion. The use of fake invoices, offshore companies or fictitious contracts is often seen as direct evidence of intent to avoid paying taxes.
Experienced tax fraud attorney is well aware of the intricacies of applying tax laws and will be able to prove that in your case there was no intent to commit fraud or that the amount of additional assessments can be significantly reduced.
Proper communication with inspection and investigative authorities often allows one to avoid the initiation of a criminal case or reduce it to less severe consequences. Timely identification and elimination of reporting gaps, a reasoned legal position and, if necessary, settlement negotiations can significantly ease your situation.
It is important to contact a lawyer at the first sign of a possible audit. If you receive notice of an upcoming audit or encounter difficulties when filing returns, it is better not to wait until the situation escalates. Contact an attorney as soon as you receive inquiries or letters from tax authorities indicating possible violations. In the early stages, it is possible to resolve the conflict, avoiding heavy sanctions and litigation.
Federal Penalties for Tax Fraud
Tax fraud in the USA it is considered one of the most serious economic crimes. Federal legislation establishes strict sanctions for intentional committing tax fraud, ranging from multimillion-dollar fines and up to long prison terms.
- Tax Evasion. Code 26 U.S.C. § 7201. Composition of the crime: intentional misrepresentation of facts (understatement of income, overstatement of expenses), as well as other schemes aimed at dishonestly reducing the amount of taxes. The maximum prison term is up to 5 years in prison. Fine—up to 250,000USD for individuals (or up to 500,000USD for corporations). Mandatory payment of prosecution costs;
- Filing a False Return. Code 26 U.S.C. § 7206(1). Composition of the crime: knowingly false information in a tax return (for example, fictitious deductions, distorted income figures). The maximum prison term is up to 3 years in prison. Fine up to 250,000USD (for corporations – up to 500,000USD);
- Failure to Collect or Pay Over Taxes. Code 26 U.S.C. § 7202. Crime: Employers or other persons responsible for withholding and remitting taxes may be subject to criminal prosecution if they intentionally fail to comply with these obligations. Punishment similar to tax evasion, including imprisonment of up to 5 years and large fines;
- Failure to File. Code 26 U.S.C. § 7203. Crime: failure or evasion to file a tax return when required by law. The penalty is up to 1 year in prison if the case is classified as a misdemeanor. Fine up to 100,000USD (up to 200,000USD for legal entities).
Found guilty of committing tax fraud companies can receive a fine of up to 500,000USD or even higher (for example, taking into account the provisions on injured parties and damages). In particularly serious cases, additional penalties through civil claims are possible.
The court may order the defendant to compensate for material damage and pay back taxes along with interest. In a number of cases, confiscation of property acquired with funds “saved” illegally is practiced.
In addition to prison sentences and large fines, criminal tax investigation may lead to loss of trust from partners, investors, creditors and clients. Companies risk encountering difficulties in accessing financial services (lending, insurance, securities placement).
In some cases, a business may be subject to the freezing of accounts and seizure of assets, which effectively ceases operating activities. In the worst case, bankruptcy proceedings may be initiated due to the impossibility of fulfilling obligations.
The key to avoiding such consequences is transparency of financial reporting, timely consultations with professionals and correct business conduct. Our experienced tax fraud lawyer We are ready to provide qualified defense.
What Should You Do if Investigated by the IRS?
As soon as you learn about the investigation, it is important to understand what stage it is at. Typically, the IRS notifies the taxpayer either through a formal letter or a summons for an interview. Find out whether we are talking about a simple audit or a suspicion of tax fraud and possible criminal charges.
Assess which department (Civil Audit or Criminal Investigation Division) is involved in your criminal tax investigation. The letter may contain instructions on what documents need to be provided and within what time frame.
Contact an experienced tax fraud lawyer. An attorney will protect you from misstatements and involuntary admissions that the IRS could use against you. A lawyer will help you collect the necessary documents, assess their relevance and avoid situations where excess information can work against you.
Make sure the attorney has experience in tax matters and international taxation if your business involves foreign markets. Maintain Confidentiality – Your lawyer is bound by legal confidentiality and acts strictly in your best interests.
The next stage is conducting an internal audit. Check the consistency of accounting records, internal revenue code, contracts, reports and other documents required by the IRS. If you find any shortcomings, consult with tax fraud lawyer about adjustments and the possibility of voluntary settlement before formal claims are filed.
After that, organize the data. Make a list of all documents that may be required: financial statements, bank statements, payment documents, tax returns for all periods requested. Prepare descriptive notes for complex or unusual transactions to quickly explain their purpose.
Communicate with the IRS competently, act only through a lawyer or on his recommendations. Always specify how documents need to be provided, within what time frame and in what form (originals, certified copies, electronic format). Refrain from providing independent explanations without consulting your lawyer. This will avoid inaccuracies that could be misinterpreted.
If the investigation leads to an audit or potential fines, an attorney can help negotiate settlement terms or a voluntary Disclosure Program.
The IRS may subpoena you for an interview or questioning. Tax fraud lawyer will help you rehearse key points and tell you what you should and shouldn’t say. A lawyer has the right to be present during the interrogation, control the correctness of the questions asked and promptly respond if your rights are violated.
If the lawyer and you deem it appropriate, you can voluntarily admit some errors in reporting and pay the arrears along with fines, which may mitigate further sanctions. Timely contact with an IRS agent can often help you avoid criminal charges and limit yourself to civil liability (fines and penalties).
In some cases, the IRS offers special programs (for example, Voluntary Disclosure Programs) that allow taxpayers to resolve debts themselves to avoid criminal prosecution.
If the case goes to trial, your defense should carefully review all evidence collected by the IRS to look for any inconsistencies or illegal methods of obtaining evidence. At unfavorable a court decision, you have the right to appeal to higher authorities. A lawyer will help you competently draft a complaint and continue your defense.
How to Choose a Federal Tax Fraud Lawyer?
Federal tax fraud – one of the most serious areas in the field of criminal law. Errors and failure to follow procedures can result in severe penalties, including large fines and even imprisonment. This is why it is so important to choose the right tax fraud lawyer who will take on the entire burden of the defense and help you find the optimal way out of the current situation.
The ideal tax attorney will have experience in both financial and criminal law. Of particular value are lawyers who have successfully defended the interests of clients in US federal courts. It is important that the lawyer understands not only the basic provisions of the Tax Code, but also is aware of current trends and internal regulations of the IRS.
An attorney must be able to communicate with IRS agents and prosecutors. Pre-trial settlement can significantly mitigate sanctions and preserve the client’s reputation. When necessary, a lawyer must effectively represent the client’s interests in court, using strategies based on real evidence and arguments.
Our lawyers provide clients with the following services:
- Initial consultation: analysis of the legal situation, study of documents, identification of prospects and risks;
- Defense during IRS audits and investigations: participation in negotiations and all actions on the part of the IRS: from requests for additional information to formal hearings and interrogations;
- Preparation of documents: the lawyer develops the necessary procedural framework (petitions, responses, complaints) and interacts with auditors and experts;
- Pre-trial agreements: If the IRS’s evidence is strong, an attorney may be able to help negotiate a plea agreement or damages, mitigating the penalty;
- Judicial protection: full-fledged work on collecting and analyzing evidence, speaking in court, appealing decisions to higher authorities.
In our company on business tax fraud a lawyer occupies a special place Iryna Berenstein – an expert with many years of practical experience. Ms. Berenstein is a distinguished lawyer with deep experience and exceptional legal knowledge in the areas of international private law, financial law, corporate law, investment regulation, compliance, data protection and reputation management.
Contact us right now to receive an initial consultation and discuss further cooperation. Our team is guaranteed to provide professional defense in situations involving accusations of tax fraud.
