Tax fraud involves the intentional violation of the legal duty to voluntarily file income tax returns and/or failure to pay the accurate amount of taxes, be it income, employment and/or excise taxes.

The following are the most common ways to perpetrate tax fraud:

• Claims for false deductions;
• Concealment or transfer of assets and/or income;
• Knowing misrepresentation of income received;
• Over reporting the amount of deductions allowed;
• Possession of two (2) sets of accounting books;
• Charging personal expenses as business expenses;
• Entry of false amounts in books and records;
• Filing a false or fabricated tax return;
• Tax evasion;
• Failure to collect employment taxes;
• Failure to pay taxes;
• Failing to file a tax return;

Depending on the circumstances of the case and the criminal history of the accused, the penalties imposable may range from five (5) years in prison and/or payment of fines of up to $500,000. Aside from the criminal penalty, the Internal Revenue Service would assess the civil liability, which is payment of the tax plus penalties and other assessments. Collection of these unpaid taxes would result in confiscation and forfeiture of properties of the accused.

Do remember not all tax avoidance or carelessness in the payment of taxes would result in prosecution for tax fraud. During the investigation, the following are the facts that investigators seek out in determining whether tax fraud has been committed:

• Understatement of income;
• Inadequacy of records of transactions;
• Failure to file tax returns;
• Inconsistent or implausible explanations of behavior;
• Concealment of assets;
• Failure to cooperate with tax authorities;
• Engagement in illegal activities or attempt at its concealment;
• Dealing in cash without receipts or record keeping;
• Failure to make estimated tax payments;
• Lying or giving evasive responses to investigators;
• Delaying tactics in the submission of documentation;
• Misleading or misrepresentation of facts;

The crime of tax fraud is a serious matter in California. Should you be or know anyone facing any of these charges, do reach out to the lawyers at the Law Offices of Ramiro J. Lluis for a free consultation today.