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If you have exposure to be charged with tax evasion in Oakland, are at the center of an IRS criminal investigation, or are concerned about potential tax fraud charges arising from a scheduled or in-progress tax audit, the time to contact an attorney is now – before you accidentally provide the government with self-incriminating information. An experienced criminal tax defense lawyer provides you with the attorney-client privilege, which is absent from any statements, records, or interactions involving your accountant or tax preparer. Only a criminal tax defense attorney possesses the skill set, the qualifications, and the legal understanding to protect your constitutional rights effectively, while strategically pursuing reductions to the serious civil penalties and minimization or elimination of the criminal tax exposure you are facing.
What is Tax Evasion (Tax Fraud)?
Though your attorney will handle the legal work and defenses to tax evasion on your behalf, understanding the allegations against you can help to alleviate your fears and make the process less jarring. Below, we offer an overview of what tax evasion is, how tax evasion charges are graded, and the potential penalties that can result from a conviction.
Types of Tax Evasion
Tax evasion, or tax fraud, is legally defined in the Internal Revenue Code (IRC) under IRC 26 U.S. § 7201, or 26 U.S. Code § 7201. This statute provides a succinct yet broad definition, stating, “Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall” be guilty of committing the crime of tax evasion.
Even though this definition is only a single sentence, it introduces two discrete concepts, namely attempts to “defeat any tax… or the payment thereof,” under the relevant code sections. Likewise, the IRS Tax Crimes Handbook differentiates between evasion of assessment and evasion of payment. (For instance, the IRS might assess, or determine that the taxpayer is liable for, additional tax following an audit.) The term “evasion of assessment” indicates a willful attempt to block the government from accurately determining what the taxpayer owes – for instance, by concealing or underreporting income. By comparison, “evasion of payment” indicates the willful nonpayment of the taxes assessed. Though technically separate, these offenses are often lumped together and referred to simply as “Section 7201 evasion,” as we discussed in our explanation of how evasion of assessment differs from evasion of payment.
Is Tax Evasion a Felony or Misdemeanor?
The short answer to this question is that willful tax evasion is graded as a felony offense. Most tax crimes are treated as federal felonies, with a few exceptions that are sometimes charged as misdemeanors, such as violations of 26 U.S. Code § 7207 (i.e. filing fraudulent tax returns).
Tax Evasion Penalties: Sentencing, Fines, and IRS Restitution
As provided by 26 U.S. Code § 7201, the federal tax evasion statute, a willful attempt to defeat or evade tax – whether its payment, assessment, or both – is a felony offense. The maximum penalty for tax evasion, in accordance with 26 U.S. Code § 7201, is a prison sentence of up to five years. This sentence may be imposed in place of, or in addition to, a criminal fine of up to $100,000 (or, for corporations, $500,000).
Judges may deviate from these guidelines and impose lesser penalties, provided there is legal justification for doing so. On the other hand, judges may also impose some additional penalties that are not explicitly mentioned in the statutes. For example, it is common for tax offenders to be sentenced to one or more years of supervised release, which is similar to being on probation, after they are released from prison. Additionally, defendants who are convicted of tax fraud are usually required to pay restitution to the IRS, which can substantially compound the criminal fines established by 26 U.S. Code § 7201.
According to the United States Sentencing Commission, 584 cases of tax fraud were reported during the 2017 fiscal year. The majority of these cases – at least 85 in total – were prosecuted here in California. The average prison sentence for tax evasion that year was 17 months. Just under 60% of the offenders “were sentenced to imprisonment only,” while the remainder received other penalties.
Oakland, CA Tax Evasion Lawyers and CPAs Can Help
Though perhaps easier said than done, it is critical to remain calm and avoid acting out of panic if you are being investigated by the IRS’ Criminal Investigation Division (IRS-CI) or other law enforcement agencies. Be aware of IRS investigation tactics, and remember that knee-jerk reactions or offhand statements could come back to haunt you as evidence in court. Respectfully but firmly insist on your right to be represented by an attorney, and to avoid making statements without your attorney present. Do NOT attempt to talk you way out of it as lying to a federal agent is a felony all by itself. Additionally the IRS will use any lie it can prove you told to establish willfulness if your case goes to trial.
At the Tax Law Office of David W. Klasing, our Oakland tax fraud lawyers have dedicated ourselves to providing zealous, cutting-edge tax controversy representation for more than 20 years. We understand the ins and outs of the judicial system, the tax code, and IRS procedure, enabling us to craft strategic, effective legal strategies. Contact us online immediately to arrange a confidential, reduced-rate consultation concerning your tax issue, or call our Oakland tax office at (510) 764-1020. You can also reach our main office by calling (800) 681-1295. Please note that meetings at our Oakland office are by appointment only.
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:
