When Can a Person Face Federal Charges for Tax Fraud?

 Posted on May 19, 2021 in White Collar Crimes

The deadline for filing 2020 income tax returns has just passed after the IRS extended this year’s date from April 15th to May 17th. While no one likes to pay taxes, federal law mandates who is and who is not required to pay federal income tax. Failure to report income and pay the taxes owed to the IRS can end up landing a person in prison on federal charges for tax fraud or tax avoidance. This is what happened recently to one Memphis, TN businessman.

Failure to Report

According to details released by the Department of Justice U.S. Attorney’s Office, Western District of Tennessee, the 38-year-old man in this case failed to report most of the income he derived from a tax service company on his 2012 federal income tax return. Last month, a federal judge sentenced the man to eight months in federal prison, followed by seven months of home detention. He will also be required to serve one year of supervised release once his 15 months of in-custody time is completed. The man is also required to pay the IRS $124,000 in restitution.

The IRS can charge a person (or business) with tax fraud if they “willfully and intentionally” falsify tax return information in order to avoid or limit the amount they are required to pay in income taxes. Some of the reasons the IRS may cite as proof of tax fraud include:

• The individual purposely failed to file their tax return.

• The individual purposely failed to pay their tax debt.

• The individual purposely failed to report all of the income they received.

• The individual purposely claimed tax deductions and/or tax credits they knew were false.

• The individual purposely filed a false tax return.

While the IRS may accuse an individual of any one of the above reasons, that does not mean the individual purposely committed fraud. For example, an individual who does their own taxes may think they qualified for certain tax credits or deductions and added them to their tax return. An honest mistake does not make one guilty of tax fraud. However, these mistakes may result in tax audits that may find that a taxpayer owes money to the IRS, as well as penalties and interest.

Contact a Knox County Criminal Defense Attorney

If you have been accused of filing false income tax returns or any other type of fraud, contact a skilled Knoxville, TN fraud defense attorney to find out about the legal options you may have to defend against federal charges. Call Jeffrey Coller, Knoxville Criminal Defense Lawyer at 865-281-1000 to schedule a free and confidential consultation.

Sources:

https://www.irs.gov/help/ita/do-i-need-to-file-a-tax-return

https://www.justice.gov/usao-wdtn/pr/memphis-businessman-sentenced-federal-prison-filing-false-tax-return