In the United States, the income tax system is based on voluntary compliance. While individuals and businesses are left to determine what they owe and pay their obligations each year, the federal government makes its own enforcement efforts. When the IRS identifies evidence of fraud, there could potentially be criminal consequences if it is not promptly addressed.

If you believe you may have committed tax fraud in some way, but an investigation has not yet begun, you could benefit from a discussion with a dedicated tax lawyer. It is difficult to maneuver through this situation without receiving a penalty but a Fairfax tax fraud and evasion lawyer advise you on how to lower your risk of criminal prosecution.

What is Tax Fraud?

Multiple types of behavior can qualify as tax fraud. It usually involves avoiding an accurate obligation by understating income or overstating deductions in unlawful ways. This behavior can lead to both civil and criminal consequences.

The task of looking into these cases falls to the IRS Criminal Investigation Division. Federal agents make use of subpoenas and other tools to identify signs of evasion or other wrongdoing. In some instances, their efforts might involve searching homes or places of business to discover proof of willful intent.

It might be possible to resolve these investigations before civil or criminal penalties become necessary, but you must do so carefully and quickly. A Fairfax tax fraud and evasion attorney could add value by looking for administrative actions that improve your standing.

Badges of Fraud

Numerous factors—known as badges—are sought by the IRS when they investigate suspected tax fraud. The signs of wrongdoing are different in every case, but certain factors are more likely than others to be present, with some of the most common examples being:

  • Missing tax returns
  • Omitted sources of income
  • Unusual usage of cash
  • Understating annual income
  • Multiple sets of accounting books

The federal government is not required to identify each of these badges to pursue charges against an individual – the presence of merely one of them is enough to initiate an investigation. A Fairfax attorney could identify signs of tax fraud and help you address them in the cleanest way possible.

Consequences of Tax Fraud

For most people, these penalties for committing tax fraud are civil in nature. Criminal charges are also a possibility in rare and extreme instances.

When it comes to civil penalties, you can expect to be assessed a monetary fine. When agents determine that an individual has underpaid their obligation to the IRS, the civil fraud penalty is calculated as 75% of the amount of the underpayment.

Criminal penalties are rare when it comes to fraud cases. However, the failure to file a return or pay an obligation can lead to monetary fines of up to $25,000 and a prison term of up to 12 months.

Failing to file a return is one thing but actively evading debts is another. In these situations, a taxpayer could face a maximum fine of $100,000 and a prison term not to exceed 5 years.

Call a Tax Fraud and Evasion Attorney in Fairfax Before an Investigation is Opened

While the IRS will not hesitate to investigate suspected fraudulent behavior, they will not formally notify you when opening an investigation into tax fraud. You must be proactive, and seek legal help when you know there is an error to correct but before the IRS has taken notice.

A Fairfax tax fraud and evasion lawyer could evaluate your circumstances, and advise you of your next steps so you can address non-compliance in a careful and reasoned manner.

Attorney John Pontius

Pontius Tax Law, PLLC is a tax law firm that strives to resolve sensitive tax problems through trust, dedication and value. The law firm was founded by John Pontius with offices in Washington, DC,  Rockville, MD, Bethesda, MD, Fairfax, VA, and Alexandria, VA. Mr. Pontius represents individual and business clients with sensitive and serious tax matters before the Internal Revenue Service and state taxing authorities. His client base is local, national, and international.

Over the course of his career, Mr. Pontius has represented businesses and individuals with complex tax issues in the following areas: FBAR examinations, offshore and domestic disclosures, FATCA, FIRPTA, tax planning, unfiled tax returns, release of tax liens and levies, trust fund recovery penalty, IRS and state audit examinations, as well as appeals, penalty abatement, U.S. Tax Court litigation, along with defense of tax fraud and evasion. If you require assistance from a tax lawyer, contact Mr. Pontius to discuss your situation.

Client Reviews
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.
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...
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...
Kareem S
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 .
Bobbie M
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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