Tax fraud is considered a criminal offense that can end up with a fine as high as $500,000, as well as up to five years in federal prison. The punishment will typically depend on how serious the offense is, as well as the intent of the person that was accused of tax fraud. If this is your case, this is what you’ll have to do:
Get an Experienced Lawyer
Tax fraud is a serious accusation, so whether you are guilty or not, you need to get a lawyer to represent you. Bear in mind that each state and city has its own tax laws and fees, so it will benefit you to get someone familiar with the tax law.
Don’t get one that’s out-of-state just because he or she has “better ratings.” If you are in San Diego, for example, it will benefit you much more to get a San Diego business tax attorney that already has experience in your area.
Take Your Accusations Seriously
The IRS doesn’t take tax fraud lightly, and you shouldn’t take the accusations lightly either. Around 3,000 people face criminal prosecution every year for tax fraud, many of which have ended with imprisonment. So, if this is your accusation, then you may want to take it seriously as well.
Listen to everything that the IRS tells you, and do not neglect your responsibility or paperwork. Remember, you may not have killed anyone, but it’s still a criminal offense. You can face jail for this, and if the IRS thinks you don’t take your charges seriously, they’ll also believe you care nothing about your taxes either.
Don’t Make False Statements
When charged with tax fraud, you might feel tempted to make a false statement in order to save your skin. Refrain from doing this, as the IRS will keep records – and if they find out you were lying, then it will only improve their case on you. If the IRS requests information, you should always provide it.
That being said, don’t go sharing every piece of information they didn’t ask for either. Don’t volunteer information if they didn’t request it. Ideally, you should always have your attorney with you, to communicate this information with them on your behalf.
Be Careful When Talking to Your Tax Preparer
While your communication with your attorney may be privileged (meaning, what you discuss with them is legally binding and your attorney cannot disclose it to third parties), the same thing does not apply to your tax preparer. The conversations with them aren’t privileged, meaning that they are not legally bound to keep quiet about you.
You may be tempted to tell them that you falsified certain records, that you knowingly did not pay your taxes as you were supposed to, or that you worked around your credits, thinking that they would help you out.
However, they are under no obligation to keep quiet on your behalf, and doing so might just double as “aiding and abetting.” There is a good chance that your accountant will be called to testify against you.
The only exception to this is if you hire a tax lawyer, and they hire a tax accountant to do your work on their behalf. Since this accountant will be reporting to your lawyer, and your lawyer is legally bound to keep your conversations private, they will indirectly have to keep quiet as well, otherwise attorney-client privilege will be violated.
Consider Paying Your Owed Taxes
This may very well depend on the state, the case, and the jury that is trying you. However, if you decide to pay the taxes that you owe, you may be able to protect yourself from receiving bigger charges. This should be done before things manage to get ugly.
If you make this sort of payment, then the IRS will see it as you being serious about making amends. It might even put a stop to any civil penalties associated with tax fraud. You should do it even if it was a mistake, and you are not guilty of what you’ve been accused of. Once it has been proven that you are innocent, you will receive a refund for the sum that you have overpaid.
The Bottom Line
Being accused of tax fraud can be very scary, and sometimes overwhelming. However, if you address matters calmly and get a good lawyer and use a good accounting software like Xero, then you should be able to get a better outcome for your case.
