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If you have been charged with tax evasion, or if you are concerned that an IRS audit could lead to a tax fraud investigation, it is urgent that you contact an experienced tax evasion lawyer serving San Jose for immediate legal assistance. The statistics do not lie: an extremely high percentage of accused criminal tax defendants are convicted and sentenced each year, making aggressive and effective representation essential.
There is no time to waste if you have been indicted, contacted by federal agents, or otherwise contacted by the IRS Criminal Investigation Division (IRS-CI). Retaining the services of a proven and tested attorney with a distinguished record gives you the best possible chance of emerging from the investigation with minimal damage. It may be possible to reduce the penalties you are facing, or potentially, obtain a declination – but the longer you delay, the narrower your window of opportunity becomes. To discuss your tax matter confidentially with a tax defense attorney in San Jose, contact the Tax Law Office of David W. Klasing online, or call today at (805) 617-4566. We are available 24 hours, seven days a week, to provide San Jose residents and businesses with dedicated tax representation.
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What is the Definition of Tax Evasion?
A person commits the federal felony crime of tax evasion when he or she takes willful, intentional actions to avoid the assessment and payment of federal taxes. The legal definition of tax evasion can be found in 26 U.S. Code § 7201, which states, “Any person who willfully attempts in any manner to evade or defeat any tax imposed… or the payment thereof” commits the crime of tax evasion. While most tax evasion cases involve federal income tax evasion, taxpayers can also be investigated and prosecuted for sales tax evasion, payroll tax evasion, estate tax evasion, or offshore tax evasion, which involves the deliberate failure to report foreign bank accounts and income by filing an FBAR and meeting related requirements.
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How Does the IRS Detect Tax Fraud?
The IRS collaborates with law enforcement agencies, tax agencies, and financial institutions throughout the U.S. and across the globe. In some cases, the IRS has achieved success in forcing banks and financial companies, such as UBS and Coinbase, to turn over taxpayers’ records by issuing John Doe summonses, issuing subpoenas, or enforcing the Foreign Account Tax Compliance Act (FATCA), which requires foreign banks to turn over information about U.S. account holders.
These techniques, combined with increasingly sophisticated software, help the IRS to detect potential fraud – but what types of signs or “red flags” are agents actually looking for during an audit? Common IRS indicators of tax fraud (also known as “badges of fraud”) include, but are not limited to, the following:
- Backdating or otherwise altering financial documents
- Claiming overstated deductions
- Concealing financial or bank accounts
- Destroying required tax and financial records
- Failing to file tax returns
- Failing to report income or certain sources of income
- Having assets that greatly exceed the amount of income reported
- Inaccurately reporting income (whether overreporting or underreporting)
- Lying to IRS auditors or agents
- Maintaining multiple or conflicting sets of books
- Threatening, avoiding, or attempting to bribe the auditor
- Transferring money or assets to a spouse, business partner, son or daughter, etc. in order to prevent such assets from being detected by the IRS
For more information on this subject, refer to our article discussing how IRS agents detect fraud and develop criminal tax cases.
What is the Penalty for Tax Evasion?
Tax evasion is a felony offense under the relevant federal statute, which is 26 U.S. Code § 7201. The same statute establishes the maximum penalties for tax evasion, which include a maximum fine of $100,000 (or $500,000 for corporations). The fine may be imposed in addition to, or in place of, prison time, with the statute providing a maximum tax evasion sentence of five years. Within these guidelines, the sentencing judge may use his or her discretion, taking into consideration factors such as the severity of the offense and the defendant’s prior criminal history, if any. Moreover, defendants may be held financially responsible for “the costs of prosecution,” in addition to IRS restitution (compensation).
Are There Civil Penalties for Tax Evasion?
In addition to the aforementioned criminal penalties, a civil fraud penalty may also be imposed. The civil fraud penalty, in accordance with 26 U.S. Code § 6663(a), may be up to 75% of the total tax underpayment amount – for example, a $15,000 penalty imposed for an underpayment totaling $20,000.
Tax Evasion Defense Lawyers in San Jose, California
At the Tax Law Office of David W. Klasing, we are tax evasion defense attorneys, CPAs, and EAs with decades of combined experience handling felony cases. With an award-winning team that features former public auditors, we have an insider perspective on how the IRS builds cases, making our firm a formidable ally in the fight against federal tax evasion charges.
If you have been charged with tax evasion or need to discuss a fraud-related tax issue, contact the Tax Law Office of David W. Klasing online to set up a reduced-rate consultation or call today at (805) 617-4566. Please note in-person meetings at our San Jose tax office must be arranged in advance.
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, whose 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:
