Criminal Tax Evasion- The Legal Definitions

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Under the Internal Revenue Code, a person who is convicted of felony tax evasion is defined as “[a]ny person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof…”. In addition to a felony conviction, one who is found guilty of felony criminal tax evasion shall be fined up to $100,000 for an individual and up to $500,000 for a corporation and/or face up to 5 years in prison. In addition to the fine and/or jail time, a felony-convicted taxpayer will also be responsible for the costs of prosecuting the case. The two basic types of evasion include: evasion of assessment and evasion of payment. The evasion of assessment includes failure to file or filing a false return. One common example we often see if where the IRS claims that not all of the taxpayers taxable income was included in their tax returns, based upon reviewing the taxpayers bank statements. Evasion of payment occurs after a tax is assessed and usually involves the concealment of assets available to pay taxes.

Under the Internal Revenue Code, a person who is convicted of misdemeanor tax evasion is defined as “[a]ny person required … to pay any estimated tax or tax, or required … to make a return, keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations…”. In addition to a misdemeanor conviction, one who is found guilty of misdemeanor criminal tax evasion shall be fined up to $25,000 for an individual and up to $100,000 for a corporation and/or face up to 1 year in prison. In addition to the fine and/or jail time, a misdemeanor-convicted taxpayer will also be responsible for the costs of prosecuting the case.

Tax fraud and false statements, under the Internal Revenue Code include willful statements and representations on any tax return or other document that “is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter.” Making fraudulent and false statements under the penalties of perjury are also actionable tax crimes.

Criminal tax evasion and committing tax fraud are serious offenses that carry serious consequences. The common thread in these offenses is willfulness. A taxpayer must intentionally act or refused to act where required, but that is difficult to prove for all parties involved (the US Attorney or taxpayer).

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