What are signs the IRS considers tax evasion to be criminal?

Signs of Criminal Tax Evasion According to the IRS

Paying taxes is a civic duty, but some people try to avoid doing so through illegal means. Tax evasion refers to illegally not paying taxes owed, usually by underreporting income, overstating deductions, failing to file returns, and other schemes. While minor errors typically just lead to back taxes and interest owed, intentional and substantial tax evasion can cross the line into criminal conduct.

So how does the Internal Revenue Service (IRS) determine when civil tax issues become criminal? There’s no bright line, but there are some clear signs that could trigger criminal charges and prison time.

Hiding Income

One of the most common tax crimes is simply not reporting income in order to lower tax liability. Examples include:

• Failing to report cash earnings
• Not reporting income in foreign bank accounts
• Skimming cash from a business without recording it

Intentionally hiding any income source from the IRS is considered tax evasion. The more money and the longer period of time over which income goes unreported, the more likely criminal charges. Even a single year of substantial unreported income can warrant charges.

Fake Deductions and Exemptions

Another way tax evaders try to cheat is by claiming deductions and exemptions they don’t qualify for. For instance:

• Claiming dependents who don’t qualify
• Deducting personal expenses as business expenses
• Grossly overstating charitable giving amounts

Falsely reducing tax liability through fake deductions and exemptions constitutes criminal tax fraud if done intentionally. As with hiding income, larger amounts and longer time periods can increase liability.

Using False Documents and Identities

Filing tax returns with fake paperwork or under false identities is a clear sign of criminal conduct. Examples include:

Christine Twomey

2024-03-21

Just had my Divorce case settled 2 months ago after having a horrible experience with another firm. I couldn’t be happier with Claire Banks and Elizabeth Garvey with their outstanding professionalism in doing so with Spodek Law Group. Any time I needed questions answered they were always prompt in doing so with all my uncertainties after 30 yrs of marriage.I feel from the bottom of my heart you will NOT be disappointed with either one. Thanks a million.

Brendan huisman

2024-03-18

Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!

Guerline Menard

2024-03-18

Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️

Keisha Parris

2024-03-15

Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.

Taïko Beauty

2024-03-15

I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!

Anthony Williams

2024-03-12

Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.

Loveth Okpedo

2024-03-12

Very professional, very transparent, over all a great experience

Bee L

2024-02-28

Amazing experience with Spodek! Very professional lawyers who take your case seriously. They treated me with respect, were always available, and answered any and all questions. They were able to help me very successfully and removed a huge stress. Highly recommend.

divesh patel

2024-02-24

I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

Load more

Google rating score: 4.9 of 5, based on 736 reviews

• Creating fake W-2s and 1099s
• Filing using a stolen Social Security number
• Filing under a false business identity

Using falsified documents often goes hand-in-hand with hiding income and claiming fake deductions. Even a single instance can warrant prosecution.

Threats and Physical Force

In egregious cases, tax evaders try to use threats or violence to avoid consequences. Examples include:

• Threatening auditors examining returns
• Assaulting an IRS collections officer
• Filing bogus property liens against IRS employees

Using force or threats against IRS personnel will not be tolerated and will swiftly lead to criminal charges.

Tax Protester Schemes

Some people protest tax laws by filing returns based on bizarre, invalid legal theories claiming taxes don’t apply to them. Examples include:

• Filing returns reporting zero income
• Attempting to pay taxes with fake financial instruments
• Filing a return claiming the First Amendment shields them from taxes

Judges have consistently thrown out these tax protest arguments. Continuing to file returns based on them can constitute criminal conduct.

Failure to File Returns

In some cases, not filing returns at all is an attempt to evade taxes. While a single late return usually just generates penalties and interest, repeatedly failing to file can trigger criminal charges. The IRS considers factors like:

• Number of years no return filed
• Amount of unreported taxes owed
• Obtaining refunds while failing to file

If an investigation shows a pattern of failing to file returns and report substantial income tax owed over multiple years, charges may result.

Obstructing Collections

Tax evaders often continue avoiding taxes owed even once the IRS detects the non-compliance. Examples of obstruction include:

• Transferring assets to conceal ownership
• Providing false information about assets and income
• Sending funds offshore to hide them

Obstructing the IRS from assessing and collecting owed taxes can constitute criminal violations on top of the original tax evasion.

Common Criminal Charges

Tax evaders face a variety of potential criminal charges depending on their specific conduct. Common charges include:

• Tax Evasion: Intentionally attempting to evade assessing, paying or collecting taxes owed.
• Filing a Fraudulent Return: Willfully filing a tax return containing false information.
• Obstructing the IRS: Corruptly impeding IRS administration through threats, force or deceit.

Convictions can result in substantial fines and years in federal prison. Tax crimes often also involve related charges like mail fraud, money laundering, and conspiracy.

Defending Against Tax Evasion Charges

Facing criminal tax charges can be frightening, but an experienced tax attorney can often negotiate reduced penalties or even avoid charges altogether. Common defenses include:

• Lack of intent: Arguing deficiencies were accidental errors rather than willful deception.
• Reliance on professionals: Demonstrating accountants contributed to filing incorrect returns.
• Diminished mental capacity: Showing mental or emotional issues hindered filing proper returns.

An attorney can also negotiate repayment plans and settlements with the IRS to avoid criminal prosecution. But working cooperatively with tax authorities is key – obstruction and deceit at this stage only make matters worse.

Avoiding Tax Evasion Charges

While the tax code is complex, avoiding criminal tax charges comes down to honestly reporting income and deductions. If the IRS suspects tax problems, working transparently to address errors and pay any back taxes owed can also mitigate risk. But knowingly hiding substantial income or falsifying deductions is asking for prosecution.

Paying taxes is rarely fun, but engaging in intentional and serious tax avoidance crosses the line. If concerned your creative accounting might catch the IRS’s attention, consult with a tax attorney before you end up facing jail time!