Maryland Federal Tax Fraud Attorney
Paying taxes has to be high on the list of the least favorite things to do for most Americans. Nonetheless, most people still pay them in order to avoid the consequences of not paying or develop strategies to eliminate or legally avoid paying them altogether. Each year, the IRS audits approximately one percent of the returns submitted by individuals and businesses. The specter of possibly being audited by the IRS is what keeps most filers honest when it comes to compliance. An audit consists of a review of accounts and financial information to ensure the filer reports information in accordance with tax codes and pays the correct amount of taxes due. If the agent finds violations, in addition to paying the understated taxes and interest, you will also have to pay a late filing penalty. If the agent determines that you have committed tax fraud, you may be assessed a civil penalty equal to 75% of the outstanding taxes, plus interest on the penalty. If you are being investigated for a tax crime, including filing a false tax return, tax evasion, filing false documents, failure to collect employment taxes, failure to pay taxes, or failing to file a tax return, an experienced Maryland federal tax fraud lawyer can help protect you from the harsh penalties associated with those offenses.
Federal Tax Fraud Investigations
Sometimes, the auditor will transfer cases to tax fraud referral specialists. This person looks at a case and determines if the matter should be referred to the IRS’s Criminal Investigation Division (CID) for prosecution. Federal tax fraud involves the use of fraudulent or illegal means to avoid paying taxes.
Federal prosecutors and the CID have tremendous powers when it comes to conducting tax fraud investigations compared to other white collar crimes. This type of investigation may be among the most frightening weapons the U.S. government has in its arsenal for fighting federal white collar crimes. When federal authorities conduct an investigation for a federal crime, they routinely obtain a copy of your tax returns and proceed with a meticulous review of the documents.
The agent will look for what it calls “badges of tax fraud,” which include:
- Understatement of income
- Cash transactions
- Inadequate, unorganized records
- Failure to file tax returns
- Improbable or inconsistent reasons for behavior
- Concealment of assets
- Engaging in illegal activities
If you report income from an activity the government has under investigation, it amounts to a confession of your role in that activity. If you fail to report income from questionable activities, the IRS may charge you with tax fraud.
Like every person, organization, and corporation in Maryland, you have the right to reduce or minimize the amount of taxes you pay to the government as much as is legally possible. However, you must follow federal laws and state statutes to ensure you meet the requirements of the law. If the federal government has subpoenaed you regarding an investigation, or you have been charged with tax evasion, it means that the government believes you willfully tried to avoid paying your tax obligations. A typical tax evasion charge may stem from evidence of hidden assets, inappropriate deductions, or overestimating expenses on your tax return.
Penalties for Criminal Tax Fraud Conviction
The government does not take tax crimes lightly. If you are convicted of committing tax fraud you can face severe penalties under federal law. Punishment may include:
- Prison: The prison terms for tax file convictions can be harsh. For example, a single conviction of tax evasion can result in a prison term of up to five years. If you are convicted on multiple counts of tax evasion, you face a greater length of time in prison and fines.
- Fines: The fines for violating federal tax laws can be very harsh. Many tax fraud crimes carry maximum penalties of $100,000 fines for individuals and $250,000 fines for corporations. For a conviction of tax evasion, the possible fine amounts are up to $250,000 for individuals to up to $500,000 for corporations. Courts can also impose fines along with imprisonment or probation.
- Restitution: In most tax fraud cases you will also be required to provide restitution consisting of the amount of taxes you failed to pay to the state or federal government, in addition to any other penalties.
- Probation: Many tax fraud cases result in the defendant receiving probation. The term of probation is usually one year, but it is possible to receive three years or more of probation. You will have to follow court orders or risk going to prison, incurring fines, or a longer probation.
In addition to the above penalties, you may be required to pay for the cost of your prosecution for each of the tax crime charges. In addition, Maryland has its own tax fraud laws and penalties, which you can be subjected to if convicted.
Defending Tax Fraud Cases
Putting on a defense for a Maryland tax fraud case requires an extensive review of the information accumulated by the government. Part of the process for a skilled Maryland federal tax fraud attorney to develop a solid defense will involve examining the prosecutor’s evidence and comparing it with your records. This process represents one of the most crucial aspects of putting together an effective defense strategy for litigating tax fraud cases.
Tax codes and related matters can be very complex. Often, clients have a number of plausible explanations for the situations in which they find themselves. If you are facing tax crime charges, it is a good idea to speak with an experienced tax fraud attorney who can work with you to sort through the evidence and figure out the best course of action.