Fraud comes in many forms. At its core, fraud is any attempt to deceive another party for a financial purpose. One common version of fraud is a failure to pay one’s taxes. The Internal Revenue Service (IRS) has the power to investigate any alleged tax fraud and to refer cases for criminal prosecution. However, proving tax fraud is never simple. A mistake on a tax return or a failure to file a return is not necessarily an indication of fraud. Instead, prosecutors must prove that a person or business made an intentional effort to change their tax liability. If a prosecutor cannot prove this beyond a reasonable doubt, a conviction is impossible.

A Washington DC tax fraud lawyer could help to create this reasonable doubt. This requires a deep understanding of the tax code and the related criminal statutes. With this knowledge, a seasoned tax attorney could help to identify the reasons for the charge and develop defenses that aim to defeat them in court.

What Does it Mean to Commit Tax Fraud?

All parties who receive an income must report this income at least every year. If prepayments or withdrawals do not cover their tax obligations, they must pay the remainder when they file. Every point during this process carries the potential for fraud and a party might not fully report every source of income that they have. For example, a waitress might fail to declare the full amount of their tips. In other situations, a business might not list its full profits. Other examples of tax fraud include:

  • Claiming improper deductions
  • Creating false documentation to alter apparent income
  • Suspicious taxpayer conduct

A Washington DC tax fraud lawyer could help to explain what it means to commit tax fraud against the federal government and how to defend against it. Additionally, a person under investigation should cease communication with their accountant because that person can be compelled to testify.

What Are the Consequences of Tax Fraud?

Many instances of tax frauds are felonies, where a conviction can result in a prison sentence and severe financial consequences.

The most common statute that prosecutors can use to pursue criminal charges is 26 U.S.C. § 7201, which says that it is a felony to take any overt act with the intent to defraud the IRS. If the prosecutor can prove this intent, the court can sentence a party to a five-year prison sentence or to pay fines of up to $100,000.

Other instances of apparent fraud are less severe but still carry harsh penalties, such as a simple failure to file a tax return. According to 26 U.S.C. § 7203, a failure to file a tax return when a party knew that they had an obligation to do so is a misdemeanor. Penalties may include up to one year in jail and a fine of up to $25,000. A local tax fraud attorney could help someone facing any of these allegations.

What Are Some Signs That a Criminal Investigation Has Started?

The following are three common red flags that could indicate to a person that a criminal investigation has begun:

  • The Revenue Agent who has been auditing the tax return ends the investigation without issuing a final report
  • The Revenue Officer responsible for collecting tax debt stops pursuing the taxpayer
  • The taxpayer or a related party is contacted by an IRS Special Agent

If any of these occur, the taxpayer should reach out to a lawyer immediately.

Defend Against Allegations with a Washington DC Tax Fraud Attorney

Cases that allege tax fraud are complicated matters. Not only must a prosecutor prove that a mistake or error on a tax document caused an underpayment, but also that a defendant intended to deceive the IRS. This means that a simple error is not enough to secure a conviction. Nevertheless, the IRS and prosecutors will persistently chase after apparent tax fraud.

A Washington DC tax fraud lawyer could provide valuable protection. An attorney works to evaluate the prosecutor’s case, examines the documents that indicate apparent fraud, and crafts a defense that meets a party’s specific needs. Contact an attorney today to let them get to work protecting you.

Experience & Practice Areas

Mr. Pontius has extensive examination experience with federal and state audits, protests of proposed adjustments and audit reconsideration. He represents clients on tax liens and levies, collection due process hearings, offers in compromises and requests for penalty abatement. He has experience with employment tax issues such as worker classification and the trust fund recovery penalty. Prior to founding Pontius Tax Law, PLLC, Mr. Pontius practiced for five years at Maryland tax controversy law firms in Rockville, Annapolis, and Bethesda. Mr. Pontius has two years’ experience in the international corporate tax group at KPMG in Tysons Corner, Virginia where he researched and analyzed a wide range of complex tax matters in the areas of compliance, provision, planning, and restructuring. At the accounting firm, Mr. Pontius worked with a broad range of U.S. multi-national and foreign-owned clients doing business as corporations and partnerships in the communications, financial services, and defense contractor industries.