Detroit Tax Evasion Lawyer
Whether you’re an individual or a business owner, getting charged with tax evasion can take years out of your life and thousands out of your bank account. While structuring your business and assets to pay the least amount of taxes is perfectly legal, intentionally failing to pay taxes that you legally owe to the federal government is a serious crime. The problem is that the boundary between legal tax avoidance and illegal tax evasion is often blurry.
When there is doubt about whether you or your business’s tax strategy is legal, a federal or a Michigan state prosecutor may charge you with tax evasion. If you underreport your earnings, fail to file a tax return, or choose not to report cash you earn from informal employment, it is likely that you will face criminal charges. In such situations, the advice and advocacy of an experienced Detroit white collar crimes attorney may be all that stands between you and serious criminal penalties.
When Can I Be Charged With Tax Evasion?
When a prosecutor has reasonable cause to believe that you have intentionally avoided paying a substantial amount of taxes legally owed to the government, he or she may charge you with tax evasion. This may occur when there is evidence showing that you:
- Underreported your income
- Lied about having dependents
- Fraudulently claimed deductions
- Overestimated your business expenses or individual deductions
- Claimed personal expenses as business expenses
- Failed to file your state or federal tax return
- Provided the IRS or the Michigan tax authorities with false documents
- Took any other action to avoid paying what you owe to the federal or state governments
The prosecutor may obtain evidence of your alleged tax evasion if someone reports you to the authorities. The IRS offers awards to anyone who reports another individual or a business that evades taxes. Under its Whistleblower Program, the IRS will award the person who reports you 30% of the additional taxes and penalties it collects from you. This means that everyone has an incentive to report you to the IRS, whether they’re friends, business associates, or even family.
Your tax evasion charges may also originate from an IRS audit. Every year, the IRS audits individuals and businesses at random in an effort to ensure that everyone is paying their share. If the initial audit uncovers discrepancies, you will be required to pay the government whatever taxes you failed to pay. If the audit discovers signs that you intentionally attempted to avoid paying these taxes, the IRS will forward the case to the Department of Justice’s Criminal Investigation Division. The CID investigators will forward any evidence they gather to a federal prosecutor who may then bring tax evasion charges against you.
What Are the Penalties for Tax Evasion?
Even if you make an honest mistake in filing your taxes, you will be penalized. If you fail to pay the taxes you owe because of negligence, you will need to pay your back taxes plus a 20% penalty. And if a prosecutor proves beyond a reasonable doubt that you intentionally and willfully avoided paying taxes that were legally owed to the government, that penalty increases to 75%.
You will also face a potential five-year prison sentence and thousands of dollars in fines for intentional tax evasion. While federal and state convictions for tax evasion involve the same potential prison sentence, the fines for a federal conviction are much higher, reaching into the hundreds of thousands of dollars. The cost of litigating in a federal court is also significantly higher than in a Michigan criminal court.
Tax evasion is a felony. This means that a conviction will result in serious collateral consequences in addition to the criminal penalties you receive. For instance, felons cannot own firearms and are excluded from certain professions. If you are an entrepreneur, your tax evasion conviction will be public information, which can seriously jeopardize your reputation and ability to do business in the future. For these reasons, it’s imperative to avoid a conviction for tax evasion at all costs if you are charged.
How Can a Detroit Tax Evasion Lawyer Help?
You should call a skilled and experienced Detroit tax evasion lawyer as soon as you are charged with or even investigated for tax evasion. The earlier a legal professional can begin working on your case, the better. It’s essential for your lawyer to know what information the authorities have so that he or she can build a legal defense that will anticipate the prosecutor’s legal claims.
In a tax evasion case, the prosecutor must prove beyond a reasonable doubt that you intentionally and knowingly took an affirmative action to avoid paying your taxes. If your lawyer can present evidence that shows that there is a possibility that you did not act intentionally and that your tax evasion was an honest mistake, it is very likely you will avoid criminal penalties. Instead, you will receive the lighter civil penalty (paying back taxes along with a 20% penalty) that will not show up on your criminal record.
At Davis Law Group, we are driven by our passion for defending the rights of the accused as they face the criminal justice system. As a former prosecutor, Attorney Maurice Davis knows how the system works, and can guide you through it to a successful resolution of your case. If you’ve been charged with tax evasion and want to know more about how we cal help, call us today at (313) 818-3238 for a free and confidential consultation of your case.