Panorama City Tax Evasion Lawyer
Regardless of why tax evasion is initially suspected, or how tax fraud is first detected, California taxpayers should make no mistake: aggressive and experienced legal representation is essential to emerging from the audit or criminal tax investigation / prosecution with the minimum amount of damage. If you or your spouse, or a business associate is currently under criminal investigation for tax evasion, is being audited for tax evasion, or is concerned about the potential for misdemeanor or felony charges after failing to pay taxes and/or filing this year’s or previous personal or business tax returns, the time to consult with a Panorama City tax attorney is today – before the situation worsens.
At the Tax Law Office of David W. Klasing, our dedicated Panorama City tax fraud lawyers are adept at avoiding or fighting tax evasion charges. Additionally, our founding attorney, David W. Klasing, has extensive experience conducting audits as a CPA and advanced training in criminal tax defense giving us first-hand insight into how tax evasion cases are built – and dismantled. To talk confidentially about how we can help with your tax issues, contact us online or call (818) 935-6098 or (800) 681-1295 to schedule a reduced-rate initial consultation.
What Does the IRS Consider Willful Tax Evasion (Tax Fraud)?
Tax evasion is sometimes referred to as “tax fraud.” There are numerous methods by which a taxpayer, whether an individual or business entity, can engage in state or federal, income tax evasion, employment tax evasion, sales tax evasion or other forms of tax fraud. The evasion may be detected after the Internal Revenue Service (IRS), California Franchise Tax Board (FTB), Employment Development Department (EDD) California Department of Tax and Fee Administration (CDTFA formerly known as the BOE) performs an audit or criminal tax investigation.
Tax evasion may involve (1) concealing income to avoid the assessment of taxes (“evasion of assessment”), (2) failing to pay taxes that have already been assessed (“evasion of payment”), or (3) a combination of both. Tax evasion often takes one or more of the following forms:
- Claiming credits, deductions, or exemptions that you know you do not qualify to receive
- Concealing income from offshore sources often through undisclosed foreign accounts
- Failing to file tax returns
- Evasion of payment of taxes that you voluntarily self-reported or for which the IRS, FTB, CDTFA or EDD has legally determined that you are liable by lying about sources of income or the existence of assets on collection information statements and or with taxing authority personnel directly
- Purposefully omitting taxable income or capital gains (e.g. Unreported taxable Bitcoin trading, exchanging or selling)
- Fraudulently deducting personal expenses as business expenses.
- Fraudulently pyramiding unpaid employment taxes
- History of cheating that comes to light in a divorce
The most challenging element of a tax crime to be proven by a Federal or California prosecutor is that the taxpayer acted “willfully,” or intentionally, to avoid paying the amount of taxes that were rightfully due and owing. Unintentional or negligent tax mistakes, though not criminal in nature, can nonetheless expose the taxpayer to a slew of civil penalties, including a civil negligence penalty of 20% of the underpaid tax.
Fines and Jail Time for Tax Evasion
The most common tax evasion cases involve violations of federal law and are therefore tried in federal courts. The federal statute establishing criminal penalties for tax evasion is titled “attempt to evade or defeat tax,” and is codified in the U.S. Tax Code or Internal Revenue Code (IRC) at 26 U.S. Code § 7201.
This statute establishes three main penalties for the evasion of tax: (1) prison time, (2) criminal fines, and (3) payment of legal costs. In accordance with the statute, these penalties may include the following:
- Up to five years of incarceration (per violation)
- Up to $100,000 in fines (for individuals) or up to $500,000 in fines (for corporations)
- Any expenses associated with prosecuting the case
What the statute does not mention is that:
- These fines, though already considerable, can be significantly expanded by the addition of IRS restitution orders, which effectively require defendants to repay the government for any tax losses caused by the accused’s entire history of tax evasion.
- The judge – in addition to incarcerating the defendant for months or years – may further order the defendant to be placed on supervised release upon leaving prison.
- The conviction will create a criminal record, which can cause headaches when applying for jobs, renting an apartment, applying for loans, attempting to purchase firearms, vote or attempting to travel abroad.
- If the defendant is a tax preparer, CPA, Attorney, Doctor, Engineer, Architect, Dentist, Actuary, or works in a similar profession, he or she will be subject to devastating professional sanctions which can effectively end their career.
- An array of expensive civil penalties can be heaped atop the criminal penalties listed above.
How a Voluntary Disclosures Can Avoid Criminal Prosecution and Minimize Civil Penalties
Depending on the nature of the case and level of IRS involvement, there are several strategies that can be followed should allegations of tax evasion become a concern for a taxpayer. These strategies are as follows:
- If the taxpayer is not currently under audit or criminal investigation, he or she may be able to make a voluntary disclosure, which could prevent the taxpayer from being prosecuted for tax crimes and jailed. Such disclosure may be “loud,” meaning formally announced to the IRS criminal investigation, or “quiet.” Even if the taxpayer is eligible to make a voluntary disclosure, it may be more pragmatic to follow a different course of action, making an evaluation by an experienced tax evasion lawyer in Panorama City essential.
- If the taxpayer is already under audit or criminal investigation, there are essentially two options, depending on the situation: (1) fight the case head-on, potentially obtaining a declination or case dismissal, or (2) cooperate with law enforcement and the taxing authorities to reach a pre-indictment deposition of the case and resolve the issue while attempting to minimize civil and criminal penalties.
Tax evasion, which is a crime, should not be confused with tax avoidance, which is not. To reiterate, tax evasion refers to an illegal action that is deliberately undertaken for the purpose of dodging the provisions of the U.S. Tax Code. By comparison, tax avoidance is the practice of lawfully minimizing one’s tax liabilities – in other words, making efficient use of the Tax Code through strategic financial tax planning and tax preparation. The line between legal tax avoidance and illegal tax evasion can sometimes become blurred, bringing forth legal tests like the Sham Transaction Doctrine and Step Transaction Doctrine, which use specific financial criteria to gauge compliance with the Tax Code.
Panorama City, CA Tax Evasion Defense Attorneys
At the Tax Law Office of David W. Klasing, our award-winning team boasts a near perfect track record of defending taxpayers and entities from tax evasion allegations, including corporations, limited liability companies (LLCs), partnerships, sole proprietorships and other entities accused of employment, payroll, or corporate tax evasion. Whether the case is civil or criminal – whether it pertains to unfiled tax returns, falsified income or sales tax returns, nonpayment of state and/or federal taxes, or a different type of tax evasion scenario – we are ready to respond with precision, professionalism, and unwavering zeal for protecting your best interests.
We can sit down with you to provide an honest assessment of the situation, then provide the tailored guidance and aggressive representation your case demands to achieve resolution. To arrange a reduced-rate consultation with our Panorama City tax evasion attorneys, contact the Tax Law Office of David W. Klasing online, or call our tax firm at (818) 935-6098 or (800) 681-1295 today. Our offices are conveniently located to serve taxpayers throughout California’s San Fernando Valley region.
Panorama City Tax Law Offices
For any of your tax planning compliance and controversy needs in Panorama City, contact the Lawyers at The Tax Law Offices of David W. Klasing today. Our experienced Tax Lawyers offer a reduced-rate consultation on new cases or engagements. Call 818-935-6098 or 800-681-1295 or contact us online today to schedule a reduce rate initial consultation at our Panorama City tax law offices, or at one of our other convenient locations across Southern California.