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A federal tax offense usually encompasses a wide array of complex tax provisions. That said, there are two frequently used statutes favored by federal prosecutors in tax fraud matters.

The Two Most Frequently Used Federal Tax Statues

  1. There is a law that states that attempting to avoid any tax or payment of tax is a felony. If you are convicted on this kind of charge, you could be incarcerated for up to 5 years and required to pay a fine of up to $100,000. For corporations, the fine could be as much as $500,000. The judge may also order you to reimburse legal expenses of the prosecution.


  1. The second law says that an individual who is required to pay a tax, make a return, keep any records, or supply any information and willfully neglects payment of the tax, filing the return, keeping the records, or supplying the information has committed a crime. Conviction under this law is usually a misdemeanor that may carry a 12-month term and a fine as much as $25,000. Again, the fine levied against a corporation is higher, at up to $100,000.

Additional tax fraud legislation relates to the willful failure to collect taxes, wage withholding infractions, and the making of false returns. A conviction can result in a sentence of one to five years, depending upon the specific crime charged.

Related Offenses to Federal Tax Crimes

Rather frequently, tax crimes will also give rise to charges of conspiracy, false statements to government officials, making a false claim against the government, or forgery.

A defendant could be subject to a range of civil proceedings as well. Forfeiture of property is one such civil proceeding. Personal or real property that may have been used in the act of violating tax laws may be seized by Treasury Department agents, and in some scenarios, forfeited to the United States. Qualifying property generally includes any property that is sold or removed to avoid paying taxes. The owner of seized property has the right to intervene and challenge any forfeiture proceedings.

What Must the Government Prove in a Tax Evasion Proceeding?

There are basically three elements the government must prove to get a conviction in a tax evasion case.

  1. First, the tax evasion must have been willful.  Actions such as keeping a double set of books, making false entries in financial records, destruction of financial books or records and concealment of assets are among the most egregious red flags.  If individuals or companies exhibit a consistent pattern of underreporting or failing to report all income or covering up sources of income, this can be enough to satisfy this element. In some cases, the jury may also infer willfulness by the defendant’s own experience and intelligence. In general, a businessperson or accountant who is perceived to be astute and experienced would be held to a higher standard than others.
  2. Second, a tax deficiency has to be proven. The law does not explicitly indicate how large an underpayment needs to be to result in a conviction. Nevertheless, the amount normally has to be substantial. The prosecution can go about demonstrating unreported income by any method that is reasonable and tends to show that there is a tax deficiency. The most common way for the government to show a deficiency is by displaying a person’s net worth. Government attorneys could also show that a person’s cash expenditures were greater than his initial net worth would support.
  3. Finally, there must be some affirmative act constituting an evasion or attempted evasion. This element customarily requires more than just a passive failure to file a tax return. Some action designed to mislead the government or conceal the truth is usually a requirement to satisfy this element. In most cases, this element is linked up with the element of willfulness.

Possible Defenses in Federal Tax Crimes Cases

A criminal defense lawyer has a long list of options in defending charges relating to federal tax offenses. Coming into the case, the prosecution is burdened to prove every element of the crime as charged. No conviction is possible if the government cannot demonstrate every element beyond a reasonable doubt. For example, the first element of tax evasion generally requires the prosecuting attorney to show that the evasion was willful. If they have no evidence that shows willfulness beyond a reasonable doubt, there can generally be no conviction.

On top of that, experienced and skilled defense counsel has numerous means of countering evidence that tends to show willfulness. For instance, a defendant could plausibly argue that he relied on the advice of others. Relying in good faith on someone who is supposed to be competent to give tax advice can be a powerful defense. A defendant can also demonstrate a misunderstanding in the law, or that he cooperated fully with the agents during the investigation. Any evidence that tends to show that the defendant acted in good faith could be beneficial.

Your defense attorney may also attack the means by which calculations were completed by the government in your tax evasion case. If the prosecution chooses to use the “net worth method”, a defense attorney can bring the argument that many of the numbers used in the calculation are simply inaccurate. Among the figures that can be used as cause for dispute are omitted assets, offsetting liabilities, and prior cash on hand. The net worth method can also be challenged if unreported items have been assigned to the wrong tax year.

A defense lawyer could also argue that the government failed to investigate leads that would explain any disputed income. There could also have been tax over-payments that can offset any alleged deficiencies.

Call Us Today

As soon as you think the government may be investigating you for tax evasion, you should give us a call.  The earlier we step in, the more effective we can be at helping you avoid charges or, if it comes to it, going to trial to fight for your assets and your freedom.


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