What To Do If You Are Accused Of Tax Fraud
If you have received a letter or call from the Internal Revenue Service (IRS) accusing you of tax fraud, you may be wondering what you should do. To help you out in this situation, here is an overview of some essential tips.
1. Take the Accusations Seriously
The IRS doesn't accuse taxpayers of fraud lightly. In fact, while the agency processes millions of tax returns every year, it only brings criminal prosecution against about 3,000 people per year. If you have received a fraud accusation, you need to take it very seriously.
The IRS defines fraud as the purposeful attempt to evade taxes or filing requirements. Depending on the situation, you can be charged with a felony for filing a fraudulent return or misrepresenting financial details to avoid paying taxes. Misdemeanor charges may apply for not filing or not keeping records, as well as civil penalties or criminal charges for not disclosing offshore accounts.
2. Don't Make False Statements to the IRS
To protect yourself, do not lie to the IRS verbally or in writing. The agency keeps detailed records, and if you are caught falsifying records or lying, that improves the case against you. You should provide information to the IRS as requested, but you shouldn't volunteer any information. Ideally, you should have a skilled professional communicate with the agency on your behalf.
3. Be Aware That Communications with Tax Preparers Are Not Privileged
When looking for someone to help you with the tax fraud accusations, you may want to consult with an accountant, but if you take that route, you need to be aware that most accountant-client communication is not privileged.
As a result, if you tell your accountant that you falsified some of the information in your accounting records, your accountant does not have a legal obligation to keep that information quiet. In other words, your accountant may testify against you if they are called to court.
4. Contact an Attorney Experienced With Tax Fraud
In contrast, attorney-client communication is privileged. Once you establish a relationship with an attorney, they cannot be legally mandated to share information about you through a discovery or a testimony under oath.
However, not all attorneys are experienced with tax law. To ensure you get the help and guidance you need, you should contact an attorney who regularly works with white collar crimes such as tax fraud. If possible, ask about previous cases and the results obtained. During your consultation, your attorney may be able to give you an overview of what to expect during the criminal trial.
5. Consider Paying the Tax Owed
To protect yourself, you may want to pay the tax that has been assessed on you. By making a payment, you show the IRS that you are serious about wanting to make amends. You also help to stop any civil penalties or interest from accruing on the tax debt.
If a criminal investigation shows that you are innocent and if a review of your tax situation shows that you do not owe the assessed amount, you can receive a refund of any overpayments.
6. Seek Innocent Spouse Relief If Applicable
In most cases, spouses are jointly responsible for tax debt if they submit their returns as married filing jointly. In situations involving criminal fraud, spouses are usually not liable, but if your spouse is charged with civil penalties, you may still bear responsibility.
The IRS innocent spouse relief program allows you to get past this issue and clear the tax debt associated with your name. To increase your chances of acceptance, you should work with an attorney who is experienced with tax issues.
At the Law Office of Ralph Torres, we represent clients in all kinds of situations. We are criminal defense lawyers who are experienced with tax fraud accusations. Don't get caught off guard by a tax fraud accusation; know your rights, work with a good team, and move forward with confidence.
