26 U.S.C. 7201, 7203, 7206 (1)

Federal Tax Evasion

The Federal Tax Codes can be complex and may seem as if they are out to get you. Hopefully, this article will help you understand where the risks are and how to get help with your situation.

Federal tax evasion typically requires intentional acts to avoid paying taxes, falsifying tax documents, willfully failing to pay taxes you owe, or intentionally failing to disclose all of your income to the I.R.S. . While simply being negligent may be a partial defense, you should consult a licensed attorney to help you understand the nuances of your case. Negligently submitting false information to the IRS can carry a 20% penalty on the amount owed, while intentionally falsifying tax related information carry the following penalties.

26 U.S.C. 7201

Under 26 U.S.C. 7201 attempting to evade or defeat paying taxes is a felony and carries a penalty of imprisonment for up to 5 years, a $250,000 fine for individuals or a $500,000 fine for corporations, or both, and reimbursement to the federal government to cover the costs of prosecuting you.

It is important to distinguish between attempting to evade assessment versus attempting to evade payment. The difference lies with when the attempted evasion occurred A frequent example is where a person or corporation attempts to move assets around so the I.R.S. wont find them and tax them, that is evading assessment.

If that same person or corporation is assessed a tax, and then later attempts to hide assets that could be used to pay the tax, then an attempt to evade payment has occurred.

These violations often result from the filing of false returns that omit taxable assets, but can also be for a failure to file at all preceded by the government independently discovering assets and assessing a tax.

To violate this section the government must prove:
  1. You attempted to evade an assessment of a tax, OR evade payment of an assessed tax AND
  1. Your evasion was willful, meaning you meant to act to deceive as opposed to simply being negligent. What you knew, when you knew it, and what you SHOULD HAVE KNOWN when you acted may be important, so talk to a licensed attorney about your unique case.
  1. To violate this section you need only attempt to evade. The fact that the I.R.S. or other government body prevented you from actually evading is irrelevant

26 U.S.C. 7203

Under 26 U.S.C. 7203 the willful failure to file a return, supply information, or pay tax at the time or times required by law, are felonies and carry a penalty of imprisonment for up to 3 years, a $250,000 fine for individuals or a $500,000 fine for corporations, or both, and reimbursement to the federal government to cover the costs of prosecuting you.

To violate this section the government must prove:
  1. You had a duty to file a tax return, supply information, or pay taxes AND
  1. You failed to file a required tax return, supply required information, or pay taxes when required AND
  1. Your failure was willful, meaning you meant to act to deceive as opposed to simply being negligent. What you knew, when you knew it, and what you SHOULD HAVE KNOWN when you acted may be important, so talk to a licensed attorney about your unique case.

26 U.S.C. 7206

Under 26 U.S.C. 7206 filing a fraudulent and false statement verified via written declaration under penalty of perjury is a felony and carries a penalty of imprisonment for up to 3 years, a $100,000 fine for individuals or a $500,000 fine for corporations, or both, and reimbursement to the federal government to cover the costs of prosecuting you.

To violate this section the government must prove:
  1. You made a false statement signed under penalty of perjury AND
  1. You made the statement knowing it was false with the intent to deceive

Next Steps

As you can see, these issues are intensely fact dependent, and carry heavy penalties. If you are being accused of tax fraud or tax evasion contact a licensed attorney to discuss your case and how they may be able to help you. The criminal justice system is powerful and you don’t want to be at a disadvantage when faced with these sorts of consequences.

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If you have recently been arrested for Tax Evasion or related offense, please don’t hesitate to call us for a free, no-obligation consultation with Seppi Esfandi. During your call, Esfandi will hear the details of the case and advice you on the best approach to defend yourself. If you wish, a consultation in our office can be promptly scheduled.

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