San Jose, CA IRS Fraud Attorney + CPA
The penalties for tax fraud vary – but all have the potential to be harsh. These penalties can cost the taxpayer not only money, but moreover, his or her personal freedom, with some potentially involving years of prison time. Criminal tax offenders may also be placed on supervised release after they leave prison, further restricting their freedoms and privileges. Other consequences of defrauding the IRS may include restitution orders, hefty civil penalties, costly accumulated interest charges, the creation of a criminal record, and/or the loss of professional licenses or certifications, including disbarment, potentially ending one’s career.
The bottom line is that if you have been charged with tax fraud or are under criminal investigation, you need a tough and aggressive tax defense lawyer in your corner. With over 30 years of experience, the San Jose IRS tax fraud defense attorneys at the Tax Law Office of David W. Klasing are here to fight for you.
List of Tax Fraud Offenses
Tax fraud is a broad term that encompasses various criminal offenses, most of which are felonies. Examples of federal crimes that constitute tax fraud include:
- 26 U.S. Code § 7201 – Attempt to evade or defeat tax (commonly called “tax evasion”)
- 26 U.S. Code § 7202 – Willful failure to collect or pay over tax (such as failure to pay over withheld payroll taxes)
- 26 U.S. Code § 7203 – Willful failure to file return, supply information, or pay tax
- 26 U.S. Code § 7206(1) – Willfully making and subscribing a false return
- 26 U.S. Code § 7206(2) – Willfully aiding or assisting a false return (commonly charged against CPAs and tax preparers)
Note that this is not an exhaustive list of all possible criminal charges involving tax fraud. For a more comprehensive list, refer to the IRS Tax Crimes Handbook.
How Does the IRS Detect Tax Evasion?
Too many taxpayers make the mistake of assuming the IRS “won’t notice” them. However, the IRS has developed an arsenal of methods and technologies for detecting fraud “red flags” – a fact which is evidenced by the high numbers of tax-related investigations, prosecutions, and convictions that are reported annually. These red flags, known as indicators of fraud or “badges” of fraud, include:
- Altered or backdated records
- Assets that greatly exceed the taxpayer’s reported income
- Attempts to threaten, bribe, harm, mislead, or lie to the IRS investigators, revenue officers or auditors
- Delinquent tax return filings, especially if there are more than one
- Excessive claiming of tax credits and/or deductions
- For employers, the misclassification of employees as independent contractors
- Records that have been destroyed or gone missing
- Unfiled tax returns, especially if there are multiple years of unfiled back taxes
- Unreported or underreported income
- Large use of check cashing services
- Large amounts of unreported cash sales or receipts
The IRS screens carefully for these and other badges of tax fraud when processing tax returns and conducting tax audits. If any are detected, the case may be referred to a Special Agent from the IRS’ Criminal Investigation Division (IRS-CI). From there, the Department of Justice (DOJ) may become involved, along with the Federal Bureau of Investigation (FBI) or other law enforcement agencies. For the complete, official list of IRS indicators of fraud, refer to Internal Revenue Manual (IRM) 25.1.2 (Recognizing and Developing Fraud), Section 126.96.36.199, available here.
What Are the Penalties for Tax Fraud?
Civil Tax Fraud Penalties
The civil fraud penalty is equivalent to 75% of the underpayment amount stemming from fraud. It may be imposed in a criminal case in addition to criminal fines and other penalties.
Criminal Tax Fraud Penalties
Criminal penalties for various fraud offenses are outlined in each statute. The statutory maximums are as follows:
- Aiding and Assisting a False Return – Up to three years in prison
- Failure to File or Pay Taxes – Up to one year in prison
- Tax Evasion – Up to five years in prison
- Making and Subscribing a False Return – Up to three years in prison
San Jose IRS Tax Fraud Defense Attorneys and CPAs
If you are under investigation for tax fraud, have been indicted for tax fraud, or have been contacted by an agent from the IRS, FBI, or other government agencies, you should contact the Tax Law Office of David W. Klasing immediately. We may be able to prevent an IRS tax audit from escalating into an IRS criminal investigation. If you have already been charged with tax crimes, we will work toward reduced penalties or an acquittal / declination.
For a reduced-rate, confidential tax consultation with our tax defense lawyers, call our law offices at (805) 617-4566, or contact the Tax Law Office of David W. Klasing online. Please note all meetings at our San Jose office must be scheduled in advance. See this page for our policy on scheduling a meeting at a satellite location.
Note: If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client. We are generally happy to travel to any of our appointment only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.
Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not! See our policies that address this issue here:
Tax Evasion FAQs
The tax fraud FAQs below are intended purely to provide general information and are in no way intended to constitute or substitute legal advice. Some frequently asked tax fraud questions our tax office receives include:
- Does the IRS Have a Dollar Threshold for Tax Fraud?
- Is it Tax Evasion if I Didn’t File an Income Tax Return?
- Is Tax Fraud Likely to Be Disclosed During Divorce Proceedings?
- What is Attempted Income Tax Evasion?
- What is the CPA’s Responsibility When Faced with Client Financial and Tax Fraud?
- What is the Difference Between Tax Evasion and Tax Avoidance?
- What is the IRS Burden of Proof for Tax Fraud Convictions?