What is Tax Evasion?
Tax evasion is the intentional underpayment of income taxes.
From a legal perspective, there is a big difference between “nonpayment” and “evasion.” Tax nonpayment simply means the taxpayer did not pay the full amount owed by the deadline. Tax evasion usually implies intent to avoid tax laws. According to the Supreme Court, willfulness, a subset of intent, is a “voluntary, intentional violation of a known legal duty.”
From another perspective, there is little difference between nonpayment and evasion. In both situations, the government just wants the money. It usually does not want to punish the taxpayer, at least in most cases. This similarity gives a Norcross criminal defense attorney an opportunity to successfully resolve tax evasion cases out of court. These resolutions are almost a good idea in federal criminal cases since the consequences of a conviction are so incredibly harsh.
Breaking Down a Tax Evasion Case
Essentially, tax evasion is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. The crux of this offense is usually a deliberate misrepresentation of the taxpayer’s affairs to the tax authorities to reduce tax liability. Common tax evasion methods include:
- Dishonest tax reporting, usually illegally claiming a dependent,
- Declaring less income, profits, or gains than the amounts earned,
- Overstating deductions,
- Bribing officials, and
- Hiding money in secret locations.
Federal tax evasion is the purposeful, illegal attempt to evade the assessment, or the payment of a tax imposed by federal law. Conviction of tax evasion may result in fines and imprisonment. These fines are extremely high, and the confinement is in a remote federal facility far from home. There’s usually no probation in the federal criminal system.
According to the IRS, small businesses and sole proprietors are the largest contributors to the tax gap between what Americans owe in federal taxes and what the federal government receives. That’s mostly because there are few ways for the government to know about skimming or non-reporting of income without mounting significant and expensive investigations.
In other words, if you are a sole proprietor or own a small business, you basically have a target on your back. The formal tax audit rate has plummeted in recent years, but do not let that statistic lull you into a false sense of security. Document requests and other informal audits are extremely common.
Possible Repayment Plans
Unless there is clear evidence of malice, not just clear evidence of intent, a Norcross criminal defense attorney can usually successfully resolve tax evasion charges. However, as mentioned above, the IRS still wants its money. So, paying that debt is intertwined with the criminal case.
Some people qualify for partial tax debt forgiveness programs, like the offer in compromise program. This initiative is basically the “you can’t squeeze blood out of a turnip” program. The obvious issue is that taxpayers must be virtually destitute to be “turnips” in the eyes of the IRS.
More people qualify for installment plan repayment. These plans avoid harassing collection techniques, but in most cases, the taxpayer must repay the debt dollar for dollar, and penalties and interest continue accruing during the repayment period.
Bankruptcy is an option as well. Usually, past-due income taxes are dischargeable if the debt is at least three years old and the returns have been on file for at least two years.
Work With a Diligent Gwinnett County Tax Evasion Defense Lawyer
If you owe back taxes, and the IRS is after you, contact Zimmerman & Associates, Attorneys at Law, for a free consultation with an experienced criminal defense lawyer in Norcross. The sooner you reach out to us, the sooner we start fighting for you.