The Internal Revenue Service (IRS) has the authority to examine a taxpayer’s returns to determine if there are any badges of fraud that warrant an investigation. The administrative consequences that come with these sensitive, or “eggshell,” investigations can be steep and a few of these investigations may even lead to criminal charges. Thankfully, a dedicated tax lawyer could help prevent these charges from ever materializing.

It is possible for you to address allegations of fraud directly with the IRS upfront. Often, this approach might conclude the investigation early on in the process. You must be precise and specific when dealing directly with the IRS. That is where a Rockville tax fraud and evasion lawyer could help. With their guidance, you could obtain a favorable outcome from a tax fraud investigation. The IRS mainly focuses on individuals and businesses with higher incomes and tax burdens, so those with smaller incomes reported on Forms W-2 who also claim standard deductions generally do not need to worry about a potential investigation.

Understanding What is Considered Tax Fraud

Tax fraud is a term that describes an effort to unlawfully limit the amount of tax debt an individual or business owes. For fraud to occur, these actions must be willful or intentional. In many cases, tax fraud results from misrepresentations on a tax return or other official form.

There are numerous ways in which an individual could engage in tax fraud. Often this involves intentionally leaving out material information on an income tax return, such as substantially underreporting income or overstating deductions. The purpose of these actions could be to limit the amount of tax that is owed to the IRS.

Businesses have also been known to engage in tax fraud. In addition to providing fraudulent tax returns, some businesses have falsified payroll tax information. Business tax fraud could also cover the failure to withhold or report payroll or income taxes. This is frequently accomplished by concealing cash transactions.

Intent to Commit Fraud

Central to every allegation of tax fraud is a person’s intent. For an action to be fraudulent, there must be an intentional or willful effort to shortchange the government on what it is owed. Someone who was negligent or careless on their tax return may receive a smaller penalty but will not be charged with fraud. One way a tax fraud lawyer in Rockville could help during an investigation is by establishing that a tax discrepancy was accidental and was not done with the intent to deceive the IRS.

Tax Evasion

Although they sound similar, tax evasion is only one potential method of tax fraud. Evasion requires willfully misrepresenting a person’s income in order to underpay tax to the government, either by evasion of assessment or evasion of payment.

Evasion of assessment occurs before a tax bill is ever due. It involves fraudulently altering the assessment of tax debt, usually by overstating financial losses or hiding income. Evasion of payment occurs after the assessment is made. While this type of evasion does not alter the amount owed, it can conceal the assets that could pay that tax bill. Evading tax payments could involve failing to report assets in overseas bank accounts or concealing assets elsewhere.

A local tax evasion attorney could advise someone on their potential liability and assist them in demonstrating a lack of willful intent to the IRS.

IRS Audits and Investigations

There are multiple forms of investigation used by the IRS. In some cases, they will merely conduct an audit. If there is reason for the IRS to find that tax fraud has occurred, it could result in a civil investigation, which does not result directly in criminal prosecution. However, it could lead to a finding that fraud was possible or likely. During audits and civil investigations, IRS investigators will typically work with a taxpayer and their local tax fraud attorney to obtain documents and answer questions they have about the filing. The IRS will also take it into account if a taxpayer relied on a professional to file their taxes and it was that professional’s fault for the mix-up. This requires extensive proof before it will be accepted as a defense.

Talk to a Rockville Tax Fraud and Evasion Attorney as Soon as Possible

If the IRS suspects that fraud may have occurred, they will investigate further to determine if criminal charges are warranted. Thankfully, a Rockville tax fraud and evasion lawyer could help you prevent further escalation by documenting how there was no willful intent to deceive. Call today to learn more.

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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