Fort Myers Tax Fraud Defense Lawyer
Joffe Law specializes in defending complex federal cases
No taxpayer wants to be investigated under suspicions of tax evasion or tax fraud. In most cases, the IRS recognizes that there are differences between making an honest mistake on a tax return and outright seeking to defraud the U.S. government. Nevertheless, individuals and businesses do come under investigation for events that do not necessarily constitute tax fraud. These situations should not be taken lightly. Individuals and business owners who are currently being investigated or who have been charged with tax fraud should contact a Fort Myers tax fraud defense attorney.
Tax fraud vs. tax evasion
Tax fraud and tax evasion are terms people sometimes use interchangeably. However, there are fundamental differences between the two. Tax fraud occurs when individuals or businesses deliberately provide falsifies their tax documents. Tax evasion is the use of illegal means to avoid paying taxes. Both offenses are serious in nature. Tax fraud is generally a felony offense.
The term “tax avoidance” sounds like it is illegal; however, the practice consists of legally-permissible strategies individuals and businesses can use to lower their income tax liability. Examples of tax avoidance strategies include tax credits, deductions, and income exclusions. Tax avoidance is also referred to as a tax shelter.
Types of tax fraud
There are several ways an individual or business can commit tax fraud. Nevertheless, at the center of every tax fraud claim is a willful attempt to avoid paying taxes. The following are a few common examples of different types of tax fraud.
Do not say anything that might incriminate you. Speak with an attorney first.
Deliberate failure to pay income taxes
Underpaying taxes is a relatively common issue. The complexity of the U.S. tax code results in everyday people and even some businesses making honest mistakes when filing their tax returns and other tax forms. Because the code is so complex, the IRS does not automatically pursue criminal charges against everyone who underpays. While there are instances in which the IRS automatically assumes the filer made an unintentional error, there are other instances that may suggest tax evasion or fraud. Examples include:
- claiming more dependents than the taxpayer has
- repeated closing and starting new businesses
- concealing assets
- not reporting all income
- grossly overstating expenses
- understating income
- using cash primarily
- maintaining separate books
- poorly maintaining records
Frivolous tax arguments in Fort Myers
Frivolous arguments, also referred to by the IRS as “frivolous positions,” are false statements taxpayers submit to support a claim in which the taxpayer argues he or she is not legally obligated to pay taxes. The following are a few examples of arguments the IRS considers to be frivolous:
- paying taxes is not mandatory
- wages are not taxable
- taxpayers are citizens of their respective states, not citizens of the federal government
- there is a religious or moral exemption from paying taxes
- income tax laws are unconstitutional
Fort Myers taxpayers who make frivolous arguments can face civil and criminal consequences. Not only can filers who make frivolous claims be penalized, but individuals who promote or help taxpayers make frivolous arguments can also be charged with a felony and sentenced to up to three years in federal prison and ordered to pay up to $100,000 if convicted.
Employment tax fraud
Employers are legally mandated to withhold taxes from their employees’ wages and pay the taxes to the IRS. Employment taxes include federal income tax, Social Security, and Medicare taxes. The employer also has an obligation to pay its portion of the same taxes. Some employers look to cut corners and save money by failing to withhold employment taxes. Employers who willfully refuse to pay taxes on their employees’ behalf steal from their employees and from the federal government. These employers also gain an unfair advantage over their competitors who comply with the tax code. Nevertheless, unpaid employment taxes are a substantial issue for the IRS. The agency collects approximately 70 percent of its total revenue from employment taxes withheld by employers. In 2016, the IRS reported approximately $59.4 billion of the taxes indicated on the Employer’s Quarterly Tax Federal Tax Returns remained unpaid. Retaining a federal criminal defense attorney in Fort Myers becomes imperative if you’re facing tax fraud (or evasion) charges.
The Tax Division works with the IRS and Offices of the U.S. Attorneys to enforce penalties against non-compliant businesses that intentionally fail to pay employment taxes. Penalties may include:
- permanent injunctions
- monetary judgments
- prison sentences
- financial penalties
Tax preparer fraud
Individuals who prepare tax documents for businesses and other individuals also engage in tax fraud. These fraudsters file false income tax returns that include inflated business expenses, false deductions, credits that are not available to the taxpayer, and excessive exemptions. Fraudulent preparers may manipulate the taxpayer’s income to enable the individual to qualify for credits for which he or she would not qualify based on his or her actual taxable income. Individuals who suspect they may have worked with a fraudulent tax preparer can file a complaint with the IRS against the preparer. If the IRS suspects a tax preparer may be defrauding taxpayers, the IRS may reach out to the taxpayer directly whether or not the taxpayer has filed a complaint.
Identity theft and tax fraud
Identity theft and tax fraud often go hand-in-hand. Fraudsters obtain victim’s name, Social Security numbers, credit card information, and other personal data with the intent to engage in criminal activity. In addition to opening new lines of credit or taking the victim’s preexisting credit cards and other accounts, some fraudsters file a tax return in the victim’s name in the interest of receiving the victim’s tax refund.
Help defending fraud charges in Fort Myers
Tax fraud charges can be costly and can lead to the accused being sentenced to time in federal prison. If you or someone you know is under investigation for tax fraud, contact our Fort Myers tax fraud defense lawyer. We will leverage the expertise of tax and finance professionals to help us devise a solid case in your defense. We will go the extra mile to protect your rights and potentially help you avoid very serious federal charges. Contact our team today to receive a complimentary case evaluation.