Los Angeles Tax Fraud Lawyers
Los Angeles contains millions of residents and thousands of businesses. Most of these residents and entities won’t encounter a tax audit too often. Moreover, few of them will ever be accused of committing tax fraud. Tax fraud cases do arise from time to time, though, and such charges are quite serious. An individual taxpayer or business accused of tax fraud shouldn’t hesitate to hire legal representation. Otherwise, they could face heavy fines or even jail time in the event they lose their case.
What Is Tax Fraud?
First and foremost, the Internal Revenue Service defines tax fraud as an intentional act. An individual or business owner willfully attempts to defraud the IRS and circumvent tax existing tax laws. A taxpayer might leave an income source of his or her return; business owners might overstate their annual expenses. Regardless of the specific action, the main goal here is to pay less in taxes than the actual amount owed. Tax fraud is intentional, and the individual or business knows exactly what they’re doing here.
The following actions are often considered types of tax fraud:
- Intentional failure to report all sources of income
- Overstating deductions or costs; understating income from a given source
- Classifying personal expenses as business expenses
- Using a fake or false Social Security number for the return
- Intentional failure to file income returns or pay taxes owed
What Are The Penalties Of Tax Fraud?
Tax fraud doesn’t come with a slap on the wrist. In fact, the IRS imposes strict penalties on individuals and businesses found guilty of tax fraud. Different types of tax-related fraud come with different penalties. Either jail time or a hefty fine is often considered standard for a given offense. However, a successful conviction may lead to both penalties. Most people don’t realize they can be sent to jail for these offenses, so they sometimes treat tax fraud accusations with a lax attitude.
Generally speaking, these are the minimum and maximum penalties for tax fraud:
- A fine ranging between $100,000 and $250,000 for individual taxpayers; a fine ranging between $200,000 and $500,000 for business entities
- A jail sentence ranging anywhere from one two five years, based on the type of fraud committed
- An additional fine amounting to the cost of prosecution for tax fraud
A variety of situations and circumstances may lead to further fines and jail time.
How Does The IRS Discover Potential Tax Fraud?
The Internal Revenue Service doesn’t accuse taxpayers of fraud at random. To the contrary, various checks and balances are used to identify potential fraud. Perhaps an individual reports far less income one year compared to previous years. Perhaps a business reports increased expenses far exceeding total from the previous year. In these cases, and others, the IRS may audit a taxpayer or business to verify return information. Taxpayers and businesses may receive random audits and triggered audits for a given year.
An audit will identify whether an individual or business has been truthful. Typically, an IRS agent is involved in the audit process. He or she might identify certain warning signs of tax fraud while working with the business or individual. Suspicious actions or tax documents could trigger a deeper look into one’s taxes and documentation. If enough warning signs are triggered, the IRS moves forward with a tax fraud case. Audits are harmless for honest taxpayers, but they’re the first step to a fraud case for others.
Why Los Angeles Tax Fraud Lawyers Are So Important Here
When the IRS opens a tax fraud case, the agency expects to prosecute a defendant. Unsurprisingly, IRS officials want to recoup funds they’re otherwise owed. Additional penalties like jail time and fines help deter others from committing fraud. IRS officials hold nearly limitless resources to prosecute tax fraud. On the other hand, taxpayers and business owners often have limited resources and limited knowledge of the tax code.
For these reasons, it’s important to hire Los Angeles tax fraud lawyers sooner rather than later. If an audit has triggered a tax fraud case, then taxpayers need to defend themselves from such accusations. Nothing is more serious than being accused of tax fraud by the Internal Revenue Services. On occasion, these charges come from misunderstandings or baseless grounds, but a tax fraud lawyer is needed to defend clients in these cases.