What is Tax Evasion?
Tax evasion is defined as the use of illegal means to purposely avoid paying federal or state taxes. It is the intentional act of misrepresenting or concealing information to reduce tax liability. Tax evasion may include under-reporting income, overstating deductions or hiding money in offshore accounts. Tax avoidance is when taxpayers do not pay more than what the law requires. The difference between tax evasion and tax avoidance is that the former is illegal and the latter is not. Tax evasion willfully conceal taxable income, engages in fraud and attempts to break the law, while avoiding taxes is legal. Some taxpayers commit acts of tax evasion when the filing a tax return. For example, some people do not report all of their income. Any money made during the year, even if it is from a side job, must be reported. They also fail to collect sales tax in regard to the goods or services they provided. Taxpayers cannot deny any of their purchases. For example, taxpayers who buy a car must pay taxes on the purchase. Others underreport their income from self-employment by excluding off-the-books cash sales on their tax returns. They fail to report all taxable interest and dividends received for the tax year. Others will claim an increased number of dependents, losses and wages. Falsifying tax returns is illegal and costly. People commit tax evasion in many ways, especially for growing businesses. For instance, companies, regardless of the size, routinely consider tax payments. Smuggling goods and services to avoid paying taxes or selling items at lower prices without collecting those taxes is illegal. People also avoid paying higher capital gains taxes by selling their investments at a loss. They also pay for services with cash after the provider is correctly paid at a prior time . There are several industries that primarily operate in cash settings, such as gambling, certain household services, restaurants, performances and sex work. Notably, the widespread use of plastic currency is to blame for most of the tax evasion in these industries. Consequently, the IRS has presumed gross receipts of 45 percent for most of these businesses and income at one and half times of their gross receipts. Repeat offenders will definitely face serious consequences. The IRS makes what they call Petersen targeting adjustments. The business’s tax return is re-opened and the return is amended to alter their tax liability after the business received a notice of audit. Seizures and levies are commonly assessed and issued. A tax levy is used by the IRS to seize property of the taxpayer until the debt is satisfied. A tax levy is not a gist; however, it may sometimes include the sale of the property if there are no arrangements made. Taxpayers are responsible for the costs of sale. For example, if a delinquent taxpayer owns a house, a bank account is levied and they will receive less than what is owed in the end. Taxpayers also receive liens against their property and tax refunds. The accusations of tax evasion are serious. The IRS is not known to settle for a simple payment plan or some other arrangement to fix a taxing issue. In fact, those who choose to go to civil court may end up behind bars. Many of the famous celebrity arrests for tax evasion often led to prison sentences. Examples of some celebrities charged with tax evasion are Wesley Snipes, Martha Stewart, Willie Nelson and Joe Giudice. Some of these celebrities were acquitted or plea bargained down. Other celebrities like Joe Giudice from the reality TV show Real Housewives of New Jersey were sentenced to prison time.
The Function of a Tax Evasion Attorney
When you hire a tax evasion legal advisor to represent you in your case, they will review all of the evidence with their vast knowledge of tax law and facts that are sure to affect the outcome of the case. They will often act as the go between for their client and the IRS and be the one at the mercy of the IRS debt collectors. A tax lawyer will be there to help you figure out how to get out of a tax mess, free up your money, resolve your unpaid taxes, and to stop the IRS from harassing you non-stop. Once a tax lawyer takes your case, they will also help put together a plan for you to resolve your back taxes and paperwork mess with the IRS due to unfiled tax returns.
The tax lawyer will file your unfiled tax returns (tax compliance), they will settle your IRS debt for a reasonable amount (tax debt settlement). They will stop wage garnishment and wage levies (bank levies and wage levies). The tax lawyers will stop illegal IRS collection abuses, abusive IRS debt collectors and IRS harassment on the telephone. Tax lawyers assist with innocent spouse help (innocent spouse release), injured spouse release help and offers in compromise (tax settlement). They will stop the IRS levy on your paycheck from your employer. They will stop the IRS levy on your bank account and the levy on income payments or other income from sources that are not wages or salary. They will fight tax penalties and interest from late filed tax returns because of IRS failure to process the tax return and interest abatement that is not reasonable cause due to the IRS. Tax lawyers stop business closure due to the IRS aggressive levies and seizure of assets to pay for business tax debt and help the sole proprietor tax debtor. They stop the IRS seizure of your house, business and other life savings, retirement fund, bank accounts, garnishments, bank levies and telephone calls.
They will help tax debtors qualify for hardship adjustments to pay off their tax debt to IRS capabilities and slowly. They also help tax debtors setup Installment Agreements with IRS over time. They will assist tax debtors with representation at Collection Due Process hearings (CDP appeal) and appeals before the US Tax Court.
How can You Tell You Need a Tax Evasion Attorney
There are several circumstances that should prompt you to find a tax evasion lawyer to represent you. For example, if you are notified that your taxes have been selected for an IRS audit, it is very important that you seek the counsel of a lawyer with tax experience. An audit can be very serious, as you may be subject to additional penalties if the audit uncovers that you have deliberately evaded payment or misled the IRS regarding the nature of your income, property or finances. The IRS taxes everyone levied the same penalties, as it does not matter if you have a collection agency background or have filed all your tax returns for the past 20 years. Collection agencies have tools that help them find ways to make sure you pay, but the IRS has them all.
A criminal investigation will call for a qualified tax evasion attorney as well. If you have received a summons to appear before the grand jury or a trial in the Court, this is a serious matter. An attorney will have the opportunity to help you sort out what a prosecutor may view as criminal activity and protect you from overly punitive measures. It is extremely important that a qualified tax evasion lawyer be made aware of your needs to best protect your assets and finances.
It is oftentimes difficult to determine whether you need the assistance of a tax evasion lawyer, as many people are not keenly aware of their rights when they are up against the taxing authorities. You probably need a tax evasion lawyer if you are being sought by the IRS and have been accused of committing a tax crime. A good tax lawyer will know how to answer the demands of the government and what to expect during an audit or investigation.
Choosing a Good Tax Evasion Attorney
Considerations for Selecting the Appropriate Tax Evasion Lawyer
When choosing a tax evasion lawyer, it is important to keep in mind several key factors that will help you make the right decision. The first consideration should be the experience and expertise of the lawyer. It is essential to find a lawyer who specializes in tax law and has extensive experience handling cases related to tax evasion. A lawyer with a proven track record of successfully litigating tax evasion cases is often the most informative indicator of future success should your case proceed past the preliminary stages.
Another factor to consider is the lawyer’s track record for achieving favorable outcomes for clients. This might include successful negotiations with tax authorities, positive results at trial, and even published legal opinions written by the lawyer. You should ask the lawyer about their experience with tax evasion cases and their approach to defending these types of allegations.
It is also important to evaluate the communication skills of the tax evasion lawyer. An attorney should be able to explain complex tax law and legal principles in a clear and concise manner. An attorney’s communication skills provide the client with insight into the quality of representation they can expect. Additionally, an attorney who is not forthcoming with information and who leaves a client in the dark concerning the status of a matter is cause for concern. The client should feel comfortable asking the lawyer questions and interacting regularly with them throughout the process.
Finally, credentials should also be taken into account. This may include any professional licenses, memberships in legal organizations, and publications authored by the lawyer. These credentials help establish the reputation of the lawyer and whether or not they are regarded as an expert in their field of practice.
Overall, it is crucial to carefully evaluate the experience, expertise, track record, communication skills, and credentials of a tax evasion lawyer to determine if they are the right attorney for you.
Tax Evasion Legal Strategies
A tax evasion lawyer may employ a number of legal strategies to achieve a favorable outcome for the taxpayer whether the case is examined or prosecuted by the IRS. If the taxpayer already has a significant tax liability, one of the lawyer’s primary goals will be to reduce the penalties by demonstrating reasonable cause, which is an exception to the accuracy related penalty. There are two separate penalties for failing to file a tax return and for failing to pay the tax owed. Both of these penalties can be reduced if the taxpayer can demonstrate reasonable cause and the showing of interest and intent to comply with federal tax laws.
A tax evasion lawyer may also resolve the case through the IRS’s Voluntary Disclosure Program , an amnesty program that is designed to encourage taxpayers to voluntarily report delinquent federal income taxes, in exchange for a promise by the IRS not to prosecute for criminal violations of federal law or assess a penalty against the taxpayer for these violations. Typically, the taxpayer must file amended tax returns for unreported income in previous years, repay any unpaid taxes, pay the interest owed, and request the maximum amount of years for 1040 tax returns. The taxpayer’s tax attorney may also be able to negotiate a reasonable amount for the taxpayers tax liability, which will be important since unpaid taxes accrue interest and penalties.
Money Considerations for Hiring a Tax Evasion Attorney
The financial implications of hiring a tax evasion lawyer can vary significantly based on the complexity of your case and the specific services offered by the attorney. However, it is important to have at least a general idea of what you might expect to pay before you make any arrangements to meet with a lawyer. As such, we wanted to take this opportunity to explore either the range of fees you might expect to pay for legal services or the various fee structures you might encounter when hiring a tax evasion lawyer.
The first thing we want to discuss in this section of the blog post is how tax evasion lawyers typically charge. In many cases, lawyers will charge clients by the hour, which can be very important if you have a complicated or particularly time-intensive case that you want to pursue. In situations in which a tax evasion lawyer believes that he or she can provide you their services in a quicker time frame, they may well suggest that you consider paying a flat fee for their services as opposed to hiring them on an hourly basis. The important thing is to only pay for those services you need and to negotiate a fair deal that will not unnecessarily disrupt your budget or result in significant debt in the future.
The vast majority of tax evasion lawyers do not come cheap. If you are currently in the midst of some serious tax issues, you will likely have to spend quite a bit of money on the legal services you use. With that being said, you should not simply default to the most expensive tax lawyer you can find merely based on the assumption that they will be excellent. In many cases, a terrific alternative is available to help you affordably receive the legal services you require.
How to Prepare for Your First Consultation
A consultation with a tax evasion lawyer is a chance for you to get a sense of how your case may be handled if it proceeds through the litigation process. It can also be a good opportunity for your lawyer to get a better sense of your situation so he or she can determine how best to proceed. Therefore , preparation for your consultation is key. If you can, try to gather the following types of information before your meeting: The above items, in conjunction with any accounts that will be important for your case, should provide the lawyer you meet with the background he or she needs to make an educated assessment of your situation.