href=”https://www.irs.gov/compliance/criminal-investigation”>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 Tax Evasion Lawyer 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.
