Nashville Tax
Crimes Lawyer

Citizens of the United States are required by law to pay taxes to the IRS. Those who willfully underpay or do not pay their taxes are committing tax fraud. However, the government must be able to prove that there was the intention to defraud the IRS. If you are found guilty of these charges, you can be liable for severe punishment.

With over 30 years of experience, I can provide skilled defense and help to protect you from the worst of conditions in the event of a tax fraud case. If you are facing charges for tax crimes, I can offer the expertise required to help you through this tedious process. I understand that your livelihood is at risk in this situation, and there are no small charges in regard to tax crimes.

Tax crimes fall under the category of white-collar crime in Nashville, Tennessee. This is because it implicates deceit for financial gain. When the IRS deems that you have committed purposeful tax evasion or fraud, they will open a case, and it will be investigated by the IRS Criminal Investigation Unit. Then, you may be prosecuted for a federal crime.

Tax fraud may present in several different ways, such as:

• Tax evasion
• Failure to file a tax return
• Failure to pay taxes
• Filing a manipulated tax return
• Failure to collect employment tax
• Filing manipulated documents
• Not keeping records at all
• Keeping two sets of financial books
• Destroying records
• Hiding sources of income
• Any other actions that conceal income from the IRS

While these are the different ways that people can commit tax fraud, the IRS typically simplifies the process to recognize tax fraud. They do this by looking for particular red flags. Those red flags that the IRS focuses on are:

• Underreporting income
• Concealed assets
• Failure to file a tax return
• Failure to make approximated tax payments
• Dealing in cash
• Using a fake social security number

Because the IRS is a federal government entity, tax fraud is considered a federal crime. There may be state implications for tax fraud as well, but since Tennessee doesn’t tax wages, any allegations would be against interest and dividends.

If the IRS is investigating you, they need to be able to prove intention. Often, people make simple mistakes, and that is counted as negligence. Negligence is not a crime. Fraud, however, is a willful act committed by an individual or business to defraud the IRS.

When auditors are doing their jobs, they typically don’t go in expecting fraud. Auditors understand that tax law is intricate and confusing, and they also understand that people are human and can make honest mistakes.

A negligent mistake on your tax return may result in something like a 20% penalty on your tax bill. If you are found guilty of fraud, your penalties are likely to be significantly more severe.

IRS auditors are taught to uncover recurrent types of transgressions, and these are called badges of fraud. Modified checks are a common badge of fraud that is typically easy to notice, as comparing numbers on the modified checks and bank statements will clearly show differences.

The burden of proof will rest on the auditors and the government to make a case for fraud versus negligence.

There are a variety of ways that tax fraud happens. From deliberately choosing not to pay taxes to tax preparer fraud, the IRS asserts that one in six taxpayers fails to obey tax law in some way.
First, when the IRS can prove intent, it is a willful failure to pay income taxes, meaning you did it on purpose. When an individual or a business fails to file a tax return, intentionally doesn’t pay the taxes they owe, makes fraudulent or false claims, or fails to report the entirety of income, it is a willful failure to pay income taxes.

Second, aside from the typical tax crimes like under representing income and failing to file a tax return, there are other tax crimes associated with business. These involve situations of money laundering and illegal earnings acquired through the means of a lawful business.

Some of these additional tax crimes include:

• Abusive tax schemes. Failure to file regulatory reports such as the Foreign Account Tax Compliance Act (FATCA) and Foreign Bank and Financial Accounts (FBAR) may result in a tax fraud charge. Offshore accounts can emphasize the desire to withhold information and indicate a greater sense of secrecy. This can lead to a direct correlation of intent.
• Refund fraud. When fake exemptions, deductions, and business expenses are applied to a tax return, this is fraudulent — and an indication that the fraud was intentional.
• Payroll and employment tax fraud. Because payroll tax is complicated, issues with payroll tax are quite common. However, failure to collect payroll tax, collecting payroll tax and not submitting it to the government, under reporting labor force numbers, or paying employees in unreported cash would all be a large red flag.

Making a frivolous tax claim can also land a person in very hot water. This looks like you are making outrageous claims to avoid paying owed taxes, which the IRS could use to prove intent to defraud.

There are also employment tax fraud schemes. While collecting employee taxes and not paying them in is a common form, there are also several other instances that can occur, including:

• Pyramiding. This is withholding payroll taxes but never paying them in to the IRS.
• Employment leasing. Outsourcing employees and payroll duties are called employment leasing. While this itself isn’t illegal, the outsourcer is responsible for collecting the taxes and paying them.
• Cash payments. When outsourcing agencies or employers pay their employees in cash, the temptation and opportunity for tax crime increases rapidly. Falsifying payroll records, under reporting payroll taxes, and under reporting employees are all part of the scheme.

As the IRS frequently brings tax fraud charges against tax preparers, this is another common area of tax fraud. While it is a major issue for the preparer themselves, it also raises serious concerns for their clients. This is particularly true if the client was aware of the tax preparer’s crimes.

Because tax fraud is a crime committed against the government and is therefore a federal crime resulting in felonies, the penalties that come with it can be much sharper than in other cases. You may be put in prison for up to five years and see fines of up to $500,000. You may also have to pay for the government’s cost of the prosecution. Corporate bodies and individuals may both be punished for tax fraud.

Some of these penalties include:

• Conspiracy. Conspiracy in the case of tax fraud is a felony. This charge can lead to five years in prison and/or fines. The guilty party may also be liable for any of the additional offenses they committed during the conspiracy act.
• Fraudulent failure to file a tax return. If a person fails to file a tax return, they may be liable for 15% of the net tax owed for every month up to five months, with a maximum punishment of 75% of the unpaid tax.
• False statements on income tax returns. Making a false statement on a tax return involves not only a prison sentence of up to three years but also fines of up to $500,000 for businesses and $100,000 for individuals and compensation for the cost of prosecution.
• Tax evasion. This is the big one. The penalty for tax evasion may involve a prison sentence of up to five years, a fine of up to $500,000 for businesses and $100,000 for individuals, and compensation for the cost of prosecution.
• Willful failure to pay taxes. This charge may result in a prison sentence of up to one year and a maximum fine of $100,000 for businesses and $25,000 for individuals.
• Assisting or aiding in the preparation of false documents under IRS law. Knowingly assisting another in defrauding the IRS may result in a prison sentence of up to three years, fines up to $500,000 for a business and $100,000 for individuals, and compensation for the cost of prosecution.

The important delineations are civil infractions and criminal tax fraud. In cases where a civil infraction is committed, the penalties are constrained to only monetary consequences such as fines and the compensation of the prosecution. Some penalties may be minor. However, as criminal tax fraud is much more serious, the consequences are similarly more serious. Prison terms of up to five years, monetary consequences of up to $500,000 for businesses and $100,000 for individuals, and the potential to compensate for the cost of prosecution in your case may all be parts of the charge.

Protecting yourself against tax fraud can be simple, as long as you stay on top of all of the requirements of IRS law. If you are an employer, you will want to make sure you’re categorizing your employees correctly, paying in the employment taxes you withhold, and maintaining the processes. Payroll accounting is often a complicated process, and restricting access to this process to only those with the knowledge to complete the work is an important way to protect you and your business.

As an individual, you should know the person who is preparing your tax return. You should be sure to check the credentials of the person. If your taxes are complicated, you should be sure to use the services of someone who is familiar with your background. Things like FATCA and FBAR should only be handled by someone acquainted with the terms and procedures. Your tax preparer should be able to manage all your tax needs.

It is human to err, and because this is the case, you should always look over your return completely before signing anything. If you notice an error, be sure to call it out. Ignoring it may result in charges of tax fraud.

If your tax preparer asks you to sign a blank tax return form, this means they could expect to file it without you reviewing it first. This could become a major issue for you down the road. Another thing to be on the lookout for is if the fees you pay are based on how much money your accountant claims they can regain for you or if the fee is a flat rate. If they accept a fee based on how much they claim to be able to recover for you, they may be falsifying your documents to maximize their profit.

If you have been charged with a tax crime, some things you can do to quickly resolve the charges are :

• Responding quickly to the notification from the IRS
• Making sure you can locate all the necessary records
• Do not tamper with them or dispose of them
• Hiring an attorney.

Having to go through a tax audit is not only stressful, but this is a pivotal instance for you as an individual. If you know that you have committed tax fraud, retaining a lawyer who can provide you with expert advice is the very best thing you can do for yourself. If you haven’t knowingly committed fraud, a lawyer can help you pinpoint the places in your defense that can prove your innocence.

A knowledgeable lawyer can help you respond to the allegations and potentially insulate you from the worst penalties.

Contacting a lawyer as soon as possible is smart, and working with the best lawyer for you may also mean the difference between freedom and incarceration. The quicker you can hire a lawyer, the sooner they can begin building your case and help you through the tax audit process. My team is equipped with the knowledge, professional contacts, legal assets, and expertise to handle your case.

Everything in your life can change in the blink of an eye. Your whole life may be on the line as you face tax fraud charges. Contact us today to begin your free consultation.