Federal Tax Evasion – 26 U.S. Code § 7201
Tax evasion is a federal crime under 26 U.S. Code § 7201 that results in excessive fines and possible prison time. Our defense lawyers understand the seriousness of this offense and we are available to help you if you are facing tax evasion charges. Tax evasion involves failing to report income or claiming unauthorized deductions.
If the government is suspicious of illegal tax activity, you may be subject to an IRS audit or a criminal tax investigation. Among the things investigated are your income tax, estate tax, and payroll tax.
To be found guilty of tax evasion, the burden of proof is on the prosecution to prove beyond a reasonable doubt that you owed an additional substantial income tax in addition to what was declared in your tax return and that you knowingly and intentionally attempted to evade or avoid the tax.
Federal tax evasion is prosecuted by the federal government depending on which jurisdiction the alleged tax evasion takes place.
That's the prosecutors who will handle it. It can take many different forms. Obviously, the substance of a federal tax evasion charge is that somebody is attempting to not pay taxes in some form or another.
It can be income taxes — trying to hide the income taxes. It can be you gaining some sort of money and you somehow do not give the government their cut of that money.
The government is very similar to the mob and that concept where any money that is exchanging hands, they gotta have a piece of it, and depending on what tax bracket you fall in, then you're gonna have to pay your percentage of taxes. That's one area where I've seen federal tax evasion charged in federal court.
Cash Payments
Another one is sometimes people will get involved with paying cash or taking case for a job and then not paying taxes on it. So, there's nothing wrong with paying cash for somebody who does a job — like an independent contractor — but somebody has to pay the tax on that money.
Usually, it's going to be the employee. They get the money and have to report it to the government and pay taxes on it. As long as they do that, they're fine.
But these workers who are performing services are being paid cash and are not paying the taxes on it, technically that is federal tax evasion. If an employer knows about it as well, then they can be complicit in that and they could be charged as well.
That's why the government is sending out 1099's to people to back-check people who are paying individuals money by way of a 1099 and then to make sure the employer reports that employee so they have a second back-checking in case the employee doesn't pay taxes on the money that they're being paid.
Again, there's all forms of federal tax evasion, but as long as you know that the core of it is the government is not getting a piece of the money, then you can kind of understand where they can file federal tax evasion charges.
Sometimes you haven't done anything wrong. Sometimes it's an innocent mistake. Other times, you really haven't done anything wrong and the government has it wrong.
Retain Experienced Criminal Lawyer
So, when it comes to these federal tax evasion changes, your first move — instead of trying to explain the whole thing to the government — is to hire an federal criminal defense attorney who is familiar with defending federal tax evasion cases.
Sometimes it starts at the civil level or it starts at the administrative level with the federal government, and then once they believe that somebody has committed a crime, they're going to move it to the criminal level.
Then you're going to have someone who investigates federal tax evasion cases and ultimately, they'll be a prosecutor who is an attorney like me.
But on the other side, who is going to prosecute the case, try to get the money back for the government and punish the person if they, in fact, can show that that person didn't pay their taxes intentionally and was trying to avoid paying their taxes, and fits squarely under the federal tax evasion parameters.
So, what I have you do is come in. We sit down. We flush everything out under the cloak of the attorney/client privilege and then we start to make decisions on how we're going to handle the case — whether we're going to cooperate with the government — or whether this is a case where they simply have it wrong and we're going to fight the case.
That's where experience and know-how and really knowing what the government is claiming you did wrong.
Being able to bring the elements of that crime and then discuss it in a rational manner as to whether or not you violated those elements or not, and then get the game plan together on how we're going to help you move passed this and put you in the best possible position in your federal tax evasion matter to protect your record, your rights, your reputation and, of course, your freedom.
Develop a Defense Strategy
As your attorney, we want to hear your side of the story and do everything we can to get you favorable results. Intention is key to the charge of tax evasion. The prosecution has to show that you had the actual intent to deceive the government.
Our duty as your defense attorney is to assert any and all applicable defenses on your behalf. If you are being charged with tax evasion, call the Hedding Law Firm and set up a free consultation. We want to hear your side of the story, gather all the details and circumstances, and start formulating a legal strategy that will be beneficial and favorable to your case.