Tax Evasion Defense Lawyer in Naples
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The Internal Revenue Service devotes considerable resources to investigating suspected tax evasion. This angle is sometimes the means by which federal investigators uncover white collar crimes or racketeering. Although organizations engaged in criminal activities may be charged with tax evasion on top of other offenses, any residents of Naples, Florida, could find themselves accused of tax evasion. Honest mistakes on tax forms or the dishonest actions of a tax preparer may attract the scrutiny of the IRS. People under investigation can depend on Joffe Law, P.A. to ensure confidentiality when seeking advice from a Naples tax evasion attorney.
Examples of tax evasion
Accusations of tax evasion can arise from many scenarios. Famously, the Prohibition crime lord Al Capone was ultimately convicted of tax evasion and imprisoned although federal law enforcement could not collect sufficient evidence to convict him for other criminal offenses. The gangster’s unreported income effectively exposed him to federal criminal charges. However, individuals and businesses may evade taxes through a number of techniques even when not involved in organized crime.
Claiming tax credits without qualifying for them
The IRS pays particular attention to personal income tax filings that claim the Earned Income Credit. Because an individual or family may collect hundreds or even thousands of dollars through the EIC, some people may be tempted to claim it despite not meeting the requirments. Income, marital status and number of children influence the amount of the EIC. Tax filers who once legitimately qualified for the credit may fail to stop claiming it when their filing statuses change. Increases in investment income can also interfere with qualifying for this credit.
Failure to report income
People who earn tips or other cash income can be tempted to not report their total income. Small business owners, especially those who have many cash-paying customers, might also report inaccurate income. Although these are the most common categories of people who fail to report income, anyone who wants to hide income may engage in this tax evasion tactic.
People making money from illegal activities frequently fail to report their income as well. When the IRS detects this problem, it could likely trigger an investigation that uncovers other criminal aspects of a person’s life, which might include embezzlement, money laundering or racketeering.
Tax preparer fraud
Most tax preparers are honest professionals, but unscrupulous actors can lead taxpayers astray. A tax preparer might claim tax credits that a person does not qualify for to increase a tax refund and pad the preparer’s bill.
Someone confronted by this situation may want legal help when explaining the source of the problem to the IRS. An attorney’s representation could assist the person with arranging a tax payment settlement with the IRS.
Do not say anything that might incriminate you. Speak with an attorney first.
Illegitimate tax shelters
If it sounds too good to be true, then it could be tax evasion. The advice of an ill-informed financial planner or accountant can motivate people to believe that they are lawfully reducing their tax burden. Duplicate or frivolous life insurance policies are one way that people incorrectly try to avoid taxes.
Such tax shelter schemes differ from the legal ways to reduce taxable income, which are:
- college savings accounts
- health savings accounts
- using home equity loans
- paying interest on college tuition
- depositing into tax-advantaged retirement accounts
- claiming legitimate business expenses
Because high income individuals typically embrace tax shelters, people deceived by unlawful methods may be liable for taxes on large amounts of money that were funneled into tax shelters. Willfully doing this could equal criminal prosecution and 5 years in prison. At a minimum, taxes, fines and penalties will be owed. Residents of Naples with incomes over $500,000 have the greatest chance of being audited.
IRS methods for detecting tax evasion
The Information Returns Processing system at the IRS conducts computerized analyses of tax returns. This system looks for inconsistencies between the income information that employers report and the income actually reported by income recipients. The tax agency is quite secretive about its data analytics, but the IRS may also be examining credit card transactions and medical records. Returns flagged by the IRP system could launch a tax evasion investigation.
Once the IRS starts an investigation, the social media activity of tax filers may come under scrutiny. This investigative tactic became apparent when the agency’s procurement office filed a request related to accessing social media content on sites like Instagram, Facebook or Twitter. Tax agents will look for evidence on social media about under-the-table online stores and lavish lifestyles that might indicate a failure to report income. Federal investigators may also view email content kept on third-party servers for a period longer than 180 days without a search warrant.
Whistleblowers also sometimes alert the IRS to people evading taxes. This may done out of an honest desire to report a crime or as an attack against someone for personal reasons.
Proving tax evasion
The deliberate intention to avoid paying taxes is at the heart of each tax evasion case. Federal prosecutors will be burdened with showing that a defendant chose to break the law.
Tax evasion defense
A defense lawyer will strive to counteract prosecutors on the basis of the facts. A defense strategy might revolve around:
- showing that someone reported income accurately
- asserting that the person made errors but did not intentionally evade taxation
- explaining that the person was deceived by others and wants to settle unpaid tax liabilities
Legal support for serious charges
The federal government wants the money that it believes is owed and will take strong action to collect it and punish tax evaders. Guidance from a tax evasion lawyer can prepare a person to respond to federal investigators. Engaging with IRS agents without an understanding of rights and responsibilities could reduce the chance of limiting negative outcomes.