If you are facing federal criminal charges, tax fraud defense lawyer Bristol C. Myers has the experience you can trust to thoroughly investigate your case and provide an innovative and relentless defense. Call now 512-478-2100 or connect online.
Title 26, United States Code, Section 7201, makes it a crime for anyone willfully to attempt to evade or defeat the payment of any federal income tax.
Elements of Tax Fraud
Tax fraud is commonly alleged for either willfully filing false tax documents (“tax perjury”) or for “aiding and assisting” others in filing false tax documents.
In a tax perjury case, the government must prove: 1) that the defendant made and subscribed a tax document that was filed with the Internal Revenue Service (IRS), 2) that the tax document contained a written declaration that is was made under penalty of perjury, 3) that the defendant did not believe the document to be true as to every material matter in it, and 4) the defendant willfully subscribed to the tax document with the specific intent to violate the law.
“Aiding and assisting” cases are not limited to those who actually prepare fraudulent tax returns. Anyone who participates in or encourages another to mislead the IRS can be held criminally liable. Therefore, tax preparers, lawyers, accountants, or other consultants are commonly targets of investigation or prosecution for this type of tax fraud.
Tax Fraud Defenses
Tax fraud defense lawyers most often focus on showing the client did not willfully violate the law. The defendant’s lack of sophistication leading to a mistake, or negligence may provide a defense. This is especially true if the defendant has a past record of tax compliance. More commonly, the good faith reliance on the advice of an accountant or tax attorney may show a lack of willfulness, provided the professional’s advice is grounded on the defendant’s full disclosure of underlying facts and information. Likewise, if the tax law in question is ambiguous or unsettled, that will support a lack of willfulness.
“Literal truth” can also be a defense to tax perjury cases. This often arises in cases where true and complete information is entered on the wrong tax form.
The United States Sentencing Guidelines say this about tax crimes: “Because of the limited number of criminal tax prosecutions relative to the estimated incidence of such violations, deterring others from violating the tax laws is a primary consideration underlying these guidelines. Recognition that the sentence for a criminal tax case will be commensurate with the gravity of the offense should act as a deterrent to would-be violators.” In other words, because the IRS knows it cannot catch everyone, the government wants to put your head on a stick as an example to others.
Much like other types of financial crimes, courts determine punishment in tax cases by referring to the amount of loss. In tax cases, the focus is on tax loss. Unpaid taxes must be examined in light of taxes that were paid, as well as deductions and credits that could have been claimed but were not. Tax rate can also be a sentencing factor. So, a defendant’s specific tax situation must be thoroughly reviewed.