The American tax system is built on voluntary compliance which requires taxpayers to report and pay what they owe. However, the IRS also takes steps to ensure that this voluntary compliance occurs. When they discover evidence of tax fraud or evasion, an investigation could begin.

If you are facing allegations of tax fraud or evasion, it is vital you seek guidance from a skilled tax lawyer today. These issues are serious but there are often ways to resolve them before a criminal investigation occurs. Let a Bethesda tax fraud and evasion lawyer favorably guide you through an IRS investigation.

Understanding Tax Fraud

The term “tax fraud” is broad and commonly used to describe a range of behaviors. In general, tax fraud occurs when a taxpayer avoids the appropriate calculation of their tax burden or evades the payment of what they actually owe to the IRS. Tax fraud investigations often result from the findings of an IRS audit and need to be taken seriously. While these are often civil matters, there are situations where a taxpayer has criminal exposure.

Criminal investigations are carried out by the IRS Criminal Investigation Division, or CID. A tax fraud investigation will be thorough, and agents will often come to a taxpayer’s home or their place of work in search of tax documents and other evidence. At the conclusion of the investigation, special agents will make a report and recommend a plan of action. In some extreme cases, the outcome could be prosecuted by the U.S. Department of Justice.

It is often possible to resolve civil or even criminal tax fraud allegations, although it will require more than simply correcting errors. A Bethesda tax fraud and evasion attorney could pursue a fair outcome to the investigation that results in the closure of any criminal or civil cases.

What are the “Badges of Fraud?”

When the IRS investigates fraud, they look for any number of signs. These signs—commonly referred to as “badges of fraud”—are all potential indicators that illegal activity has occurred. Some of the common badges of fraud include:

  • Missing tax returns
  • Heavy usage of cash
  • Unexplainable behavior
  • Separate sets of accounting books
  • Understated income
  • Other accounting irregularities

A taxpayer in Bethesda who is being investigated for fraud should consult a lawyer immediately and discuss if any of this behavior applies to them.

Civil and Criminal Consequences

Different consequences can arise from a tax fraud investigation, with the penalties potentially being civil or criminal in nature. A Bethesda attorney could use their knowledge of tax fraud and evasion laws to steer an investigation away from criminal exposure by working with the taxpayer and the IRS to amicably resolve the matter.

Civil Consequences

The consequences of a civil case do not involve the threat of prison but that does not mean they should be taken lightly. Civil penalties are financial in nature and a fraudulent underpayment of tax can result in a 75% penalty for the amount that was underpaid.

Criminal Consequences

There are several criminal punishments related to tax fraud. If a taxpayer does not file a return or does not pay the tax amount owed, they could receive a fine of up to $25,000 and prison sentence of up to 12 months. The punishment for overtly attempting to evade tax (such as underreporting income) can lead to either a $100,000 fine or a prison sentence of five years. Given the significant nature of these punishments, a lawyer in Bethesda is necessary to help navigate a sensitive tax fraud or evasion inquiry.

Call a Bethesda Tax Fraud and Evasion Attorney Today

If you have concerns that you may have committed tax fraud without willful intent, you should protect your interests by call a Bethesda tax fraud and evasion lawyer immediately. There may still be time to correct these mistakes and prevent the IRS from commencing a criminal investigation. Whether you need to file missing tax returns, remit your business’s trust fund taxes to the government, or pay the tax that you owe, Pontius Tax Law can provide a comprehensive analysis of your situation. Give us a call to discuss your next steps.

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John helped us with a DC tax audit and succeeded in getting us a "no change" final decision. The issues were related to two flow-through entities and the use of carry-forward operating losses -- something that the DC auditors struggled to understand and with which they did not have any...
Paul A
Mr. Pontius is extremely professional and was able to take care of my tax returns which includes international bank accounts quickly and at a very reasonable price. Would definitely recommend.
Karl
I received a fee this past November from the IRS for over $800 because of an error I made on my 2016 taxes. I called my cousin, John Pontius, and he immediately knew what steps needed to be taken. Thanks to him, the fee was cleared. A 10 minute conversation...
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As an American citizen living in the Middle East my local banker informed me that I needed to file FBARs and report my worldwide income to the IRS. Through the recommendation of another attorney at an international law firm, I was introduced to John Pontius. Mr. Pontius efficiently and effectively...
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John handled a difficult IRS lien for my client. He was excellent in getting the lien released so we could close on the property. I would highly recommend John .
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We were seeking tax advice with managing two properties, LLC, as well as some future financial planning. John responded to my call in a timely manner and was happy to answer our questions while referring us to specialists who can manage our accounts on a more regular basis.
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