Tax evasion and tax fraud are crimes that carry serious penalties under both federal and California state law. Many individuals and businesses who are investigated or accused of tax evasion believe they can simply remedy the situation by paying the taxes owed. This is not always the case. Such individuals may not realize that criminal tax evasion charges may still be pending even if the taxpayer’s outstanding tax liability has been paid. In addition, taxpayers who engage in tax fraud or tax evasion may face civil liability.
At Delahunty & Edelman LLP, we are deeply knowledgeable and skilled in defending clients against criminal tax fraud charges. Oftentimes, we recommend early engagement with tax authorities in an effort to resolve the dispute. For this reason, we believe that individuals and businesses undergoing investigation for tax violations should reach out to us as soon as practicable so that we can work to resolve the issue before criminal charges are applied. Once engaged, we are able to leverage our understanding of the unique and specialized manner that the government must prove criminal tax cases. But if the case is not able to resolve, we are fully committed to using our trial experience to obtain a favorable outcome either through pre-trial negotiation or trial.
Tax fraud is committed when an individual or business avoids or attempts to avoid paying their tax liabilities through some form of willful deceit. This may occur either through evasion of tax assessment by intentionally underreporting income or evasion of tax payment by failing to disclose or hiding assets to avoid a tax payment. Tax fraud can lead to both civil and criminal liability. For purposes of criminal penalties, the government must prove that inaccurate tax information was presented willfully to tax authorities, which is a very high standard for the government to show.
Actions that lead to tax fraud allegations include but are not limited to:
In order to be found guilty of criminal tax evasion, the government must prove beyond a reasonable doubt that you were personally involved in filing the return and you willfully provided false information in support of a false tax return. Specifically, they must prove three elements:
The IRS can impose civil penalties of significant fines against taxpayers who willfully file a return with false information or who willfully fail to file a tax return. While civil penalties may not include jail time, there is no statute of limitations for civil tax fraud penalties and the burden of proof the government is required to produce is lower than in a criminal case.
In a criminal proceeding, the government must prove each element beyond a reasonable doubt, whereas the burden of proof in a civil case is “clear and convincing evidence” of each element of tax fraud.
If you receive a house call or are otherwise contacted by a special agent for the IRS, it is time to remain silent and contact an experienced criminal tax fraud defense attorney immediately. Ideally, you should reach out to a tax fraud defense attorney even before you are contacted by the IRS, if you have any reason to believe you may be liable for a criminal tax offense.
In these situations, it is not uncommon for people to reach out to their CPA or tax preparer or try to cooperate with the IRS and pay their back-taxes as quickly as possible. However, reaching out to an experienced tax fraud defense attorney with whom you can establish an attorney-client relationship ensures that key communications are privileged and confidential.
Any statements you make to the IRS can be used against you and it is likely that your tax preparer will be contacted by the IRS to serve as witness.
If you have been accused of criminal tax fraud, or if you have been asked to answer questions in an investigation that may give rise to tax fraud charges, it is important that you seek legal advice as soon as possible.
As former Assistant U.S. Attorneys, Patrick Delahunty and Will Edelman bring the perspective and experience of federal prosecutors who have obtained convictions against multiple defendants in fraud cases in California. With experience on both sides of these cases, our team brings an informed perspective when examining evidence in your case and developing a defense strategy. Our goal is to resolve these allegations as quickly as possible and fully exonerate our clients or substantially mitigate the charges against them.