In the United State, income and financial gains are taxable each year. Most people file tax returns in both their state of residence and with the Internal Revenue Service. Intentionally violating this duty to voluntarily file tax returns is a crime of tax fraud and evasion. Paying an improper amount of tax that you owe is also considered to be tax fraud and evasion. Both are crimes with serious consequences for anyone convicted of tax fraud or tax evasion charges.
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The taxes we pay are used by the federal and governments to benefit the general public in many ways. Some tax funds are used to support public works, like highway maintenance and construction. Other funds go into designated funds for public programs like welfare, education and environmental works. Taxes support our military and other defense programs. Despite the general good that tax money goes towards, many people complain about taxes or are reluctant to pay their fair share each year. If this reluctance is acted upon by not paying or reporting taxes properly and on time, the citizen could face criminal charges and penalties.
IRS Federal Tax Fraud & Evasion
On the national level, people who do not voluntarily file a tax return with the IRS when they do owe taxes are committing tax fraud. In the Internal Revenue Code, there are criminal provisions that are designed to punish you if you willfully evade reporting and paying taxes. If you file a fraudulent return, that is an attempt to evade required taxes. A state that wants to prosecute you for tax fraud must prove that you willfully did not file your tax return or that you did not completely report your income.
The government will attempt to prove you willfully failed to file your taxes if they believe you committed tax fraud. They will try to prove that you did not file a return, you did not report income, or you acquired assets in the names of other people, corporations, trusts or other third parties. Another way to commit tax fraud is by operating a cash business, or by keeping no records. Looking at your books and records is an important way to evaluate the potential for a tax case.
About Massachusetts Tax Fraud Laws
There are many ways to commit tax evasion and tax fraud. There are separate penalties, both civil and criminal, for violations of the various types of tax fraud and evasion crimes under state and federal law. For example, if you file a frivolous tax return, it would give insufficient information or show an improper tax owed. The fine for that activity is $500. Understating your tax owed by more than ten percent of the proper tax amount or $5000 will get you a 20% accuracy penalty.
Civil penalties can be more serious for not filing a tax return due to fraud. Penalties can accrue by 15% for each month the return is late, up to a maximum penalty of 75%. Also, if you commit tax fraud or tax evasion at both the state and federal levels, you can expect prosecution by the federal government and the state of Massachusetts.
Sentences for Tax Fraud – Massachusetts
Sentences for Tax Fraud in Massachusetts can be quite hefty. A conviction on this charge can bring a fine of up to $25,000, plus a prison sentence up to one year. The IRS can try for a felony conviction. If they prove you did not file because you were trying to evade taxes, that felony conviction can include a fine up to $100,000 and a five year prison sentence. In addition to tax fraud and tax evasion, associated crimes that may occur at the same time include: falsifying business records, forgery, embezzlement and grand theft.
Statistics for Tax Fraud
In the United States, about three percent of taxpayers do not file returns. For the year 2005, it is estimated that the U.S. had an uncollectible tax deficit of about $345 billion. The IRS reports that during the Fiscal Year 2013, there were 1554 investigations initiated, resulting in 976 sentences. The average number of months served was 31.
There is a Statute of Limitations that applies to tax returns. In general, this time limit is three years from either the date a return was due or filed, whichever is later. During that time period, the IRS can make tax assessments. It is advisable to keep all business records for at least this period of time. Some changes recently may extend this limitation to six years.
Criminal Defense for Tax Fraud
One main defense against tax fraud charges is proving there is insufficient evidence that the person evaded paying or filing taxes intentionally and with purpose. The IRS will attempt to prove knowledge of wrongdoing and willful intention to defraud. Simple mistakes or carelessness will not lead to conviction. Another defense is to prove that the taxpayer had an honest belief that they were not committing this crime. The taxpayer would need to prove reliance on faulty information.
Defense methods in addition to proving insufficient evidence or mistakes also include: claiming that the IRS made an error in calculating taxes, the statute of limitations time period is over, entrapment defense, insanity, and lack of intentional conduct.
Tax Fraud and Evasion Lawyer
An experienced Criminal Defense Attorney who has handled many successful Tax Fraud cases is your best person to consult for legal advice and representation for this issue. They will have the experience, knowledge and legal skills to handle complex tax fraud and tax evasion cases prosecuted by the federal government and state governments.
If you are accused of tax fraud at the state or federal level, get immediate legal representation from an experience Tax Fraud and Evasion Criminal Defense Lawyer. The sooner you get started with your defense, the quicker this problem can be resolved.