Paying taxes in the United States is said to be one of two things that are unavoidable; the other being death. Even so, people still find ways to avoid paying taxes and hope that the Internal Revenue Service does not catch up with them. The unfortunate reality is that the IRS and their investigators typically identify tax evasion during audits—whether they catch on immediately, or if it takes a few years, is irrelevant.
There are a variety of legal methods to reduce your tax burden, such as by allotting pre-tax income to an IRA account, in which a citizen can work with an accountant in order to ensure that any legal method of reducing their tax burden is identified and considered. The IRS does not take issue with someone using legal means to reduce their taxes since these means are specifically considered and determined to be a productive way to handle income. The problem arises when someone uses illegal methods to reduce the amount of money that they owe in taxes, using a variety of methods that we will discuss below.
If you have been charged with tax evasion by the IRS, working with an experienced tax evasion attorney is one of the best steps that you can take in order to ensure that you are taking the right steps towards a resolution. Contact the Law Office of Vikas Bajaj, APC today to request a free consultation so that we can begin working on your case as soon as possible. Trying to take on the IRS, or any other federal agency, on your own is overwhelming and unadvisable. Working with a law firm experienced in federal crimes and federal agencies is the best way to make sure that your case gets the attention and consideration it deserves.
Read more below about tax evasion charges in the United States, and contact us now to work with a federal crime lawyer on your case.
What Is Tax Evasion?
Tax evasion is the deliberate act of avoiding paying the amount of taxes owed by an individual, trust, or company. There are several different ways that tax evasion can take place, but the offense ultimately comes down to misrepresenting financial statements or information in order to appear as if less money is owed to the IRS.
Some examples of tax evasion methods are as follows:
Underreporting Taxable Income
Underreporting the amount of money that you earned in a tax year is one of the most basic forms of tax evasion. If an individual made $100,000 in a year, or if a company made $1million in a year, but reported 40% less in their taxes, so reporting $60,000 or $600,000 in the aforementioned examples, this is a clear and basic example of an attempt to avoid paying taxes on 40% of the earned income for that tax year.
IRS auditors have a variety of ways to find corroborating evidence for incorrect information that is submitted, including gathering 1099 and W-2 documents from parties who paid the individual or company, or by compiling information from other third parties in order to identify inconsistencies.
Falsifying Financial Documents
In order to create a “compelling” amount of evidence or information to submit to the IRS in order to corroborate their misrepresented tax reporting, an individual or company may forge, edit, or otherwise falsify certain documents that they submit to the IRS on their tax returns. This can be done in combination with a variety of other methods in order to attempt to mislead IRS officials into believing that the information being provided is accurate and complete.
As with all other auditing methods that the IRS may use to clarify and possible concerns about tax information that they have been provided, an auditor will want to take a closer look at these documents, as well as any contributing or corollary information, in order to confirm the legitimacy of this information. Falsifying documents can be more serious than misreporting income because it is a lot more difficult to claim ignorance or error.
Falsely Claiming Expenses
Typically a business—though in certain cases an individual or household—will report a variety of expenses throughout the tax year that will reduce the amount of taxable income that they earned throughout that year, and therefore reduce their tax burden. This is a completely legitimate method of tax avoidance that is intended to determine a reasonable amount of money that any one individual or company owes after paying these costs.
Legitimate business expenses can be things like employee retirement plans, company vehicles, business meals, employee benefits, and more. The issue arises when the IRS suspects that a company (or individual) has reported expenses that either did not happen, or the amounts are incorrectly calculated. These expenses and the necessary proof will be central to the audit that the IRS will undertake in this situation.
Contact Us Today
Regardless of the reasons that you have been charged or are being audited for tax evasion, contact our firm as soon as possible to get the right legal team for your situation. We will be able to represent you through the audit and through any possible case that results in formal charges being filed. Going against the IRS for any case is an enormous task, meaning that you need to work with an attorney who is experienced and up for the job.