Having your taxes audited can be a lengthy and unpleasant process. But being charged with a crime related to taxes is arguably even worse, because a conviction could lead to prison time.
Someone facing charges related to their taxes could be charged at both the state and federal level, depending on the government’s claims against them. In other words, the IRS could get involved. The stakes will likely be high, so a defendant needs to make sure that they have an experienced defense attorney on their side.
There are two general categories of tax-related criminal laws. Tax fraud has to do with intentionally falsifying information on a tax return, for the purpose of reducing a tax bill. Essentially, it is cheating on your taxes. Tax evasion, on the other hand, is the failure to submit a tax return at all.
Common tactics that are considered to be tax fraud include:
- Underreporting income
- Claiming false expenses or deductions, like reporting personal expenses as business expenses
- Lying to investigators
- For businesses, failing to collect employment taxes
- Violating employer withholding requirements
As with other white collar crimes, proving tax fraud or evasion at trial can be highly technical. Prosecutors may seek to avoid trial by pressuring the defendant in a tax crimes case to plead guilty or accept a plea bargain. However, no one should take such a deal without seeking advice from their defense attorney. Going to trial, if necessary, is often less of a burden than the sentence after a guilty plea, which can include incarceration and a huge tax bill.