Tax Controversy / Tax Fraud

Due to a suspected increase in non-compliance by corporate taxpayers, we are now seeing a surge in IRS enforcements, with small businesses the likely targets of stepped-up monitoring, increasing the chances that you or your business may at some point face an investigation.

Tax-related offenses can involve state and federal authorities, including the Franchise Tax Board and the Internal Revenue Service, as well as state and federal prosecutors such as the district attorney, attorney general, the Department of Justice, and the U.S. Attorney's Office.  

Failure to file a tax return

Failing to file a tax return is an offense subject to penalties and criminal prosecution.   At the very least, the IRS may prepare a return on your behalf which does not include all the deductions and exemptions to which you may be entitled, although it will include penalty fees and interest from the date a return should have been filed.

Even if you haven't filed on time, you may still be able to avoid criminal prosecution by making arrangements to file late.  However, flagrant or repeated failure to file on time will lead to an investigation.

Filing a false tax return

Knowingly and willfully filing a federal tax return which is false in any material way is a federal offense.  A related offense is Tax Return Preparer Fraud, where a tax preparer makes inflated claims for expenses, deductions, credits, or exemptions on behalf of a client.  While the preparer may be subject to criminal sanctions, the taxpayer-client is put in jeopardy as well.  Regardless of what he or she knew about the substance of the return, the taxpayer is liable for additional taxes and interest and may be subject to penalties as well.

Tax Evasion

While it is not illegal to minimize your taxes by taking advantage of deductions, tax shelters, and other lawful practices, failing to pay taxes to which one is liable is a punishable offense known as tax evasion.  The distinction between tax avoidance and tax evasion may be complicated at times, but it can mean the difference between financial savings or criminal charges.

If you find yourself under investigation for a criminal violation of state or federal tax laws, contact Cummins & White LLP today to speak with an attorney experienced in tax controversy criminal defense.