Taxpayers who have not filed taxes in a number of years generally have a sense that they are not in the best legal or financial position. When individuals who have neglected to satisfy their tax duties for years come into our law offices, they are typically apprehensive and anxious regarding what our review might find. However, if you work with the Sacramento tax lawyers and tax professionals of NewPoint Law Group, LLP, you can rely on our careful and strategic approach to the law. We will explain the situation you face, explore potential means to address your situation, and inform you of any foreseeable complications that may impact your plan. By addressing each element of your tax concerns systematically, we can provide legal options that are likely to address your concerns while also mitigating your anxiety regarding the process. To schedule a confidential consultation at NewPoint Law Group, LLP’s Folsom or Roseville offices, call 800-358-0305 today or contact us online.
Taxpayers Can Face Tax Evasion Charges Due to Non-Filing of Taxes Plus an Affirmative Act of Evasion
Many taxpayers seem to believe that they can’t face any real consequences due to a continued failure to file taxes. The taxpayer may realize that he or she can face a failure to file penalty and a failure to pay penalty; however, some taxpayers are less concerned about financial tax penalties and the interest that will accrue. Taxpayers are encouraged to avoid this type of sloppiness and neglect when it comes to their tax obligations because, under certain sets of circumstances, an auditor may view the non-filing as part of a scheme to evade the assessment or payment of taxes.
In particular, a scenario where a taxpayer fails to file his or her taxes and engages in actions that can be interpreted as an “affirmative act of evasion” is dangerous for a taxpayer. To be clear, a passive failure to file taxes is not the scenario we are warning taxpayers against. Rather, the failure to file taxes must be accompanied by some act by the taxpayer that is intended to further or conceal the fraud. Potential examples of affirmative acts of fraud can include:
- A taxpayer who keeps multiple sets of books or financial records for his or her company.
- A taxpayer who produces false invoices, receipts, sales records, or other documentation.
- A taxpayer who engages in the destruction of books or records.
- Taxpayers who handle transactions in a manner intended to avoid the generation of records. A common example of this type of behavior is a business owner who uses one or more check cashing service to convert receivables to cash to pay workers under the table.
- A taxpayer who engages in steps to conceal a source of income. Common income concealment procedures include funneling money to a trust or shell company, utilizing agents to accept payment, and taking payments in cash.
The above covers only some of the more common acts. However, any act that is likely to have the effect of concealing or misleading in regard to the tax fraud, can serve as the basis for an affirmative act. If you have failed to file taxes in conjunction with an affirmative act of fraud, you could face felony tax evasion charges.
What Are the Potential Penalties for Tax Evasion?
If you are accused of committing criminal tax evasion under IRC Section 7201, you face felony tax charges. That means that a federal prison sentence is a possibility. In this case, IRC 7201 authorizes the imposition of a potential prison sentence of up to five years. Following the end of the prison sentence, convicted individuals will also typically serve a supervised release period.
Aside from the potential prison sentence, there are also monetary penalties. Individuals who are convicted of tax evasion are typically required to pay restitution to the parties impacted by their fraud or tax evasion. The tax evasion statute also authorizes an additional monetary penalty of up to $100,000 ($500,000 in the case of a corporation). Furthermore, individuals convicted of tax fraud are also responsible for paying the costs of their prosecution.
Work with Sacramento Tax Lawyers to Fix Non-Filing Mistakes
If you have failed to file taxes and are worried that your actions may create the basis for criminal tax evasion charges, the Sacramento tax audit lawyers of NewPoint Law Group, LLP can help you assess your risk and develop a compliance plan. We approach all matters strategically and always strive to minimize the potential impacts and costs of fixing tax problems. To schedule a confidential consultation at our Roseville or Folsom, California law offices, please call 800-358-0305 today or contact us online.