Most tax penalties involve civil charges instead of criminal charges. Civil tax charges involve financial fines and penalties but criminal charges also carry the possibility of imprisonment. In some cases, the IRS may pursue both criminal and civil tax fraud charges. If you are aware of a criminal tax investigation or possible tax fraud charges, contact Juda Gabaie at Gabaie & Associates, LLC to understand your rights and how to avoid a criminal conviction.
Criminal Tax Investigations
According to the IRS, the Criminal Investigation Division (CI) initiated 2,886 in 2018. The division had a more than 91% conviction rate. CI uses data analytics to find the most impactful cases to investigate and prosecute. Criminal cases can involve:
- International tax enforcement,
- Employment tax,
- Refund fraud,
- Tax-related identity theft,
- Public corruption,
- Terrorist financing, and
- Money laundering.
Criminal Tax Penalties and Criminal Charges for Tax Violations
A number of tax violations can result in possible criminal charges. Under the Internal Revenue Code (IRC), criminal tax law provisions include:
- § 7201. Attempt to evade or defeat tax
- § 7202. Willful failure to collect or pay over tax
- § 7203. Willful failure to file a return, supply information, or pay tax
- § 7204. Fraudulent statement or failure to make statement to employees
- § 7205. Fraudulent withholding exemption certificate or failure to supply information
- § 7206. Fraud and false statements
- § 7207. Fraudulent returns, statements, or other documents
- § 7208. Offenses relating to stamps
- § 7209. Unauthorized use or sale of stamps
- § 7210. Failure to obey summons
- § 7211. False statements to purchasers or lessees relating to tax
- § 7212. Attempts to interfere with administration of internal revenue laws
- § 7213. Unauthorized disclosure of information
- § 7213A. Unauthorized inspection of returns or return information
- § 7214. Offenses by officers and employees of the United States
- § 7215. Offenses with respect to collected taxes
- § 7216. Disclosure or use of information by preparers of returns
- § 7217. Prohibition on executive branch influence over taxpayer audits and other investigations
Tax Evasion Under IRC § 7201
Among the most common criminal tax charges is tax evasion. Under IRC § 7201, it is a crime for any person to willfully attempts in any manner to evade or defeat any tax or payment imposed by federal tax law.
The penalties for tax evasion include a fine of up to $100,000 ($500,000 for a corporation) and imprisonment for up to five years. If convicted, the defendant may also be required to pay for the costs of prosecution.
Tax evasion involves more than making a simple mistake, forgetting to include something on your tax return, or making a mathematical error. Tax evasion involves intentional fraud. The prosecutor generally has to establish, beyond a reasonable doubt, the following:
- A substantial income tax was due and owing in addition to what the defendant declared;
- The defendant made an affirmative attempt to evade or defeat an income tax; and
- The defendant willfully attempted to evade and defeat the tax.
Maryland Tax Attorney
If you have been charged with a tax crime or are subject to a possible criminal tax investigation, contact your tax attorney as soon as possible. Criminal tax penalties may result in fines, jail time, and a criminal record. Contact Juda Gabaie at Gabaie & Associates, LLC online for a free consultation or call (410) 862-2198 for help with your IRS or Maryland tax issues.