26 U.S. Code § 7201 - Attempt to Evade or Defeat Tax
Tax evasion, a white-collar crime, carries significant penalties, including hefty fines and potential jail time, the severity of which is determined by the case details.
Depending on which taxes have not been paid, you could face prosecution in California or federal court. 26 U.S.C. § 7201 is the federal statute regarding the imposition and collection of taxes, and prosecutors use it when someone willfully attempts to evade or defeat a federal tax.
It's a crime to pay less than you owe on taxes deliberately, and the most common forms of tax evasion charges are related to the following:
- under-reporting your actual income,
- making false statements on your tax return, and
- failure to even file a tax return.
Despite efforts to reduce tax evasion incidents through audits, the Internal Revenue Service (IRS) still faces a massive yearly problem.
While tax fraud is a serious crime at the federal level, it's also a severe offense in California with strict repercussions.
Please know that for a prosecutor to tell you about violations of tax evasion laws, they have to prove you knew the information was false. It was deliberately provided with the intent to avoid paying taxes.
Our Los Angeles criminal defense lawyers are reviewing the laws more closely below.
What is the Definition of Tax Evasion?
Tax evasion is commonly called tax fraud, which includes any behavior involving a deliberate act of not paying your taxes. The most common methods include:
- Failure to file a tax return: Failure to file a return does not release anyone from their obligation to pay taxes.
- False transactions to conceal: Making a fake transaction is often discovered during an audit of all alleged transactions.
- False residency: Tax filers who live in California frequently claim to be residents of another state with lower taxes and liability.
- Transfer of assets: Allocating assets to pay less taxes is widespread, but it's illegal and can lead to criminal charges or hefty fines.
- Filing a tax return with false information: This is a common and frequent inconsistency, and false claims could result in a tax audit.
- False claims of high deductions: High deductions listed on your tax return mean you will own less money, which is also unlawful.
- Under-reporting or omitting income: Filers have multiple places to store their money and income. From numerous bank accounts to web applications, keeping these funds out of a tax return is illegal.
The IRS knows that errors happen, but there is a difference between an honest mistake on a return and intentional tax evasion.
In cases of honest errors, the IRS generally adjusts the tax return, and the taxpayer must pay the difference.
What are the California Tax Evasion Codes?
California has two codes for tax evasion, and the penalties depend on your case specifics and the evidence the prosecution uncovered during their investigation.
Taxation Code 19705 makes it unlawful for anyone to willingly make false statements on their tax returns and pass them off as factual.
Taxation Code 19706 applies to individuals, officers, or employees who fail to file a tax return or make false statements on the tax return.
What is Federal 26 U.S.C. § 7201 Tax Evasion?
The federal crime of tax evasion is legally defined under 26 U.S.C. § 7201 as follows:
- Any person who willfully attempts to evade any tax imposed, in addition to other penalties, and if convicted of a felony, will be fined up to $100,000, or $500,000 for a corporation, or imprisoned up to 5 years, or both.
It should be noted that tax evasion requires an affirmative act, meaning it intentionally violates a known legal duty.
You can be convicted under this statute if you knowingly and willfully sign and submit a tax return that contains material false statements, including omitting information.
What are the Defenses for Tax Fraud?
Many people fall prey to making moves that put them in the wrong position regarding taxes.
If you're facing any tax fraud charges in California at either the state or federal level, it's crucial to seek legal representation immediately. I will guide you through the process, ensuring you understand every aspect of your case.
You'll give me all the information. Don't leave anything out because it will just be to your detriment. Then, we will design a plan to get you the best result.
Sometimes, the plan involves fighting the government; other times, it involves negotiating with the government. It depends on the circumstances and evidence the government has and what you and I decide is the best course of action.
These tax fraud cases involve the government not receiving money it believes it is entitled to. The mafia is similar in that whenever money moves or exchanges hands, it needs to get a piece of it.
If you don't give them their piece and their percentage and they find out about it, especially if it's a significant amount, they will come looking for you. This can lead to severe penalties, including hefty fines and imprisonment, making it crucial to seek legal advice if you're facing tax fraud charges.
They're going to bring their agents and bring their prosecutors. Many of these federal judges are sympathetic to the government, especially in these tax fraud-related cases.
How Can We Prepare an Effective Defense Strategy?
So, we need to determine precisely what you're accused of doing. Then, we'll sit down in the privacy of my office and dissect it piece by piece to determine an effective defense strategy for the best possible outcome.
Sometimes, the government doesn't get it right. They believe one thing is going on when, in fact, another thing is going on.
Unfortunately, they often conduct one-sided investigations in these tax fraud cases and only get part of the story, especially during the investigation phase.
You want to get somebody like me on the case. I've got 30 years of experience investigating, trying, and negotiating these cases. I can put the pieces in place to defend you properly.
Sometimes, the government needs to hear your side of the story, and they don't press charges against you. Other times, they need to listen to your side of the story, and we can negotiate something pre-indict or a pre-criminal complaint. Negotiating with the government can lead to a more favorable outcome, and a defense lawyer can help you navigate this process.
It just depends on what evidence they have, what exactly you did, what your criminal record looks like, and how much money the government is claiming they're out.
Can I Pay the Money Back to the Government?
If we can restore the government's financial position by repaying the allegedly unpaid taxes or the money that was purportedly taken, we significantly improve our negotiating position.
First and foremost, besides punishing somebody, the government's job is to ensure they get their money back if they're out of money. If we can help them get the money back, we put ourselves in a strong negotiating position. That's on the one end.
Conversely, sometimes the government can't prove you're guilty of any tax-related offense, and that's when we need to fight them. We need to challenge their evidence, conduct our investigation, and be ready to cross-examine their witnesses at a preliminary hearing, a trial, or a motion, whatever the case may be.
