Oakland IRS Fraud Attorney + CPA
Oakland residents who commit tax fraud place themselves in serious jeopardy of life altering negative legal and financial consequences. The taxpayer may be investigated and criminally prosecuted, and if he or she is convicted, will face penalties including prison time, IRS restitution, criminal fines, and supervised release. In addition to criminal penalties for tax evasion, civil fraud penalties can also be imposed, amplifying the repercussions of fraud. If you have been accused of, or are under investigation for, willful tax evasion, you need an experienced Oakland tax evasion attorney who will be dedicated to your case from day one.
At the Tax Law Office of David W. Klasing, our Oakland tax attorneys have extensive experience in criminal tax defense. We know when to fight back aggressively, and when it serves our clients best to focus on penalty mitigation. We are here to counsel and protect you if you have exposure to be, or have been, charged with tax fraud in Oakland or elsewhere in California.
What is the Definition of Tax Evasion (Tax Fraud)?
Tax fraud can be broadly defined as any intentional action, whether attempted or successfully completed, that a taxpayer takes for the purpose of cheating the tax code and evading his or her tax liabilities. The term the IRS typically uses to describe such conduct is “willful.”
The terms “tax fraud” and “tax evasion” are often used interchangeably (not to be confused with “tax avoidance”). The federal tax evasion statute is located at 26 U.S. Code § 7201, which differentiates between willful attempts “to evade or defeat any tax” under the Internal Revenue Code (IRC). In addition to tax evasion under 26 U.S. Code § 7201, the term “tax fraud” can refer to numerous other tax crimes, some examples of which are summarized below.
Common Examples of Tax Fraud
There are many ways in which a taxpayer can commit fraud and evade his or her tax liabilities. Some taxpayers run into trouble after failing to file returns, where each count is ordinarily charged as a misdemeanor but can be ramped up to felony income tax evasion if any of the factors of Spies versus the U.S. are present. Intentionally submitting returns that contain stolen or falsified information can be charged as a felony as well. Consequently, there are many types of criminal charges that can arise from various tax fraud schemes, depending on the taxpayer’s specific actions and intent. Examples of ways that taxpayers commit tax fraud include:
- Willfully failing to collect or pay over tax (26 U.S. Code § 7202)
- Willfully failing to file tax returns (26 U.S. Code § 7203)
- Willfully failing to pay taxes (26 U.S. Code § 7203)
- Willfully filing false tax returns (26 U.S. Code § 7206(1))
- Willfully aiding or assisting with the preparation of false returns (26 U.S. Code § 7206(2))
These charges are sometimes compounded by additional charges that are not necessarily tax-specific, such as conspiracy to defraud the U.S. government (18 U.S. Code § 286), mail fraud (18 U.S. Code § 1341), or aggravated identity theft (18 U.S. Code § 1028A).
How the IRS Detects Fraud
The IRS trains revenue agents (auditors) and revenue officers (debt collectors) to look for specific indicators, or “badges,” of tax fraud, which, if detected, will likely result in referral of the case to the IRS Criminal Investigation Division (IRS-CI). Some of these “badges of fraud” involve the information reported by the taxpayer, while others relate to records and bookkeeping, and others still involve taxpayer conduct. A few examples of events or actions the IRS considers to be “red flags” for tax evasion include:
- Backdating financial documents
- Commingling business and personal expenses
- Concealing income or assets, such as property or bank accounts in a collection action
- Failing to file tax returns, particularly if there are multiple instances
- Failing to report all sources of income
- Maintaining multiple, conflicting sets of books
- Reporting different amounts on tax returns and books
- Using stolen or falsified Social Security numbers
- Withholding information from tax preparers, accountants, or attorneys
Civil and Criminal Penalties for Tax Fraud
An array of criminal and civil tax penalties may be imposed upon individuals or corporations that engage in tax fraud. Many taxpayers are surprised to learn that civil penalties are commonly imposed in addition to criminal penalties in tax evasion cases. The maximum penalties for tax offenses are established by their corresponding statutes, though judges may, in some cases, impose lesser sentences. Maximum statutory prison sentences and criminal fines for each count of a tax offense are as follows:
- Under 26 U.S. Code § 7201, tax evasion is punishable by five years in prison and $100,000 in fines.
- Under 26 U.S. Code § 7202, willful failure to collect or pay over tax is punishable by five years in prison and $10,000 in fines.
- Under 26 U.S. Code § 7203, willful failure to file returns, supply information, or pay tax is punishable by one year in prison and $25,000 in fines.
- Under 26 U.S. Code § 7206, willfully making and subscribing a false return, or helping another to do so, is punishable by three years in prison and $100,000 in fines.
The civil fraud penalty, imposed under 26 U.S. Code § 6663, is equivalent to 75% of the fraud-related underpayment. It may be imposed if a taxpayer makes serious misstatements on a tax return, such as dramatically underreporting his or her income.
Oakland IRS Tax Fraud Defense Lawyers and CPAs
In any misdemeanor or felony tax case, it is vital to be prepared and stay one step ahead of the prosecution. If you believe are under investigation for tax fraud, or if you are concerned about the potential outcome of a tax audit, you need to begin developing your defense strategy as soon as possible. Our office has extensive experience with both egg shell and reverse egg shell audits. Reverse egg shell audits are on the rise and are very dangerous for taxpayers.
Contact the tax evasion attorneys at the Tax Law Office of David W. Klasing online to arrange a reduced-rate consultation, or call our Oakland tax office at (510) 764-1020. Alternately, you can reach our main office by calling (800) 681-1295. Please note that any in-person meetings at our Oakland location are appointment only.
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: