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Tax Evasion: What Happens When the Government Catches You

Criminal Law Blog by The Law Office of Greg Tsioros

Tax Evasion: What Happens When the Government Catches You

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Tax Evasion Laws

Taxes are a fact of life for everyone that earns an income in the state of Texas. Although it may not be pleasant, paying taxes is the responsibility of all American citizens who earn a wage. Every year, around April 15th, people boot up tax preparation software or head into a tax office to make sure that all of their payments and deductions are covered.

However, some people inevitably try to dodge the taxman. This is always a bad idea. When the state or federal government catches a person who is guilty of tax evasion, the punishments that they hand down can be very severe. Taxes are the funds that the government uses to run its daily operations and intentionally avoiding tax payments can lead to a bad situation.

Tax Evasion Laws

At both the state and federal level, tax evasion is considered a type of tax fraud. Tax fraud is any attempt to use deceit or false information to cheat the tax system. Tax fraud can include attempts to get a bigger refund, claim deductions that don’t apply or file a lower income than what was actually earned.

Tax evasion is an outright attempt to avoid paying a full tax liability or an attempt to avoid paying taxes altogether. This is a very serious crime. Whether it is state taxes or federal taxes, tax evasion is routinely investigated and punished. Federal tax evasion cases can be investigated by the IRS and state tax evasion may be investigated by police officials or state government employees.

Attempting to evade or defeat a federal tax is a federal crime. Also, failing to file a tax return, pay a tax bill or supply required information to the IRS is a federal crime.

Negligence vs Fraud

Everyone knows that tax laws are complicated. Even tax officials and accountants agree on this point. It is normal for an average person to make some mistakes on a tax form and not everyone can afford to hire a tax accountant or attorney. This is when tax errors caused by negligence can occur. This can include errors like:

  • Arithmetic errors
  • Claiming an extra deduction
  • Forgetting to pay tax on interest or stock earnings

While these errors can be serious, tax officials at the IRS are trained to spot fraud and errors. In most cases, a simple error can be penalized with a 25% financial penalty based on the total amount of the tax payment.

However, a deliberate attempt at tax fraud or tax evasion can be met with a 75% penalty and a criminal conviction.

Legal Penalties

The IRS does not take kindly to tax evasion or fraud. A first time conviction for the willful evasion of a tax liability can lead to:

  • Incarceration in federal prison for up to 5 years
  • A fine of up to $250,000

A first-time conviction for failure to file a return or pay taxes can lead to:

  • One year in federal prison
  • A fine of up to $100,000

In addition, a person who is convicted of tax evasion may find themselves more likely to be audited or investigated in the future. Angering the government by failing to pay taxes is a good way to end up in their list of taxpayers to investigate.

Legal Defenses

Of course, to secure a conviction for tax evasion, the prosecution must prove that the defendant willfully evaded taxes. A defense attorney may counter this claim by arguing that the mistake was due to simple negligence. The attorney may introduce evidence to show that the defendant had no motivation to cheat the system and he or she may argue that similar mistakes occur on a regular basis.

With strong evidence and good arguments, the defense attorney may be able to help the defendant avoid a conviction.

If you or someone you know has been charged with criminal tax evasion, contact attorney Greg Tsioros, an experienced and aggressive lawyer that can help. Contact his office today at 832-752-5972.

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