Tax evasion and other forms of tax fraud are crimes taken very seriously by the revenue departments of both the United States and South Carolina governments. Because tax evasion can be prosecuted at both the state and federal level, the potential penalties can be devastating.
Even an innocent mistake can cause an individual or business to be charged with a crime punishable by multiple fines and even a term of imprisonment. However, a practiced attorney can help. An experienced South Carolina tax evasion lawyer may know the options available for fighting, negotiating and settling tax issues to reach the best possible outcome.
The IRS Recognizes Two Types of Tax Evasion
A taxpayer, whether an individual or a business entity, can commit tax evasion in one of two ways. First, the taxpayer can be found guilty of tax evasion for trying to evade the assessment of taxes. This can occur in several different ways that lead to either under-reporting the amount of income received or over-reporting the number of legitimate tax deductions to which the person or entity is entitled.
A taxpayer may also be found guilty of tax evasion for attempting to avoid the actual payment of taxes. For example, the taxpayer might claim that no funds are available when in fact that person or entity has moved or concealed funds to hide them from the Internal Revenue Service (IRS). It is highly recommended that a person accused of this offense should consult with a South Carolina tax evasion lawyer.
An Affirmative Act is Required
In most cases, the taxpayer must be found to have evaded the payment of taxes by taking some type of affirmative action rather than making an accounting mistake that leads to accidental underpayment. However, if the taxpayer has employed a bookkeeper or accountant to calculate taxes and that accountant acts in which the principal taxpayer is unaware, the taxpayer may still be held liable if the accountant took action under the taxpayer’s authority.
Examples of Tax Evasion
Although an affirmative act is required for a finding of criminal tax evasion, the act taken may seem relatively minor. Examples of conduct that is generally found to constitute tax evasion include:
- Destroying or altering records
- Claiming deductions for an exaggerated amount
- Holding property in the name of a third party
- Hiding income
- Creating invoices for fictitious services or goods
- Maintaining two sets of accounting records
- Hiding money in an overseas bank account
- Claiming deductions for which the taxpayer is ineligible
Provisions in the federal Tax Relief and Health Care Act of 2006 provide encouragement for whistleblowers to identify to the IRS any individual, corporation or other entity that they believe may be committing tax evasion. What may appear fraudulent on the surface may be defendable in court, however, so it is important for anyone facing tax evasion charges to ensure that their side of the story is fairly represented. This can be done with the help of a South Carolina tax evasion lawyer.
State and Federal Penalties for Tax Evasion
Under the federal tax code, any individual who willfully attempts…to evade or defeat assessment or payment of taxes may be convicted of a felony and sentenced to up to five years in prison and a fine of up to $100,000. The maximum fine increases to $500,000 for corporations. (26 U.S.C. 7201). In addition, court costs and other significant fines may be imposed. Similarly, South Carolina also treats tax evasion as a felony offense with the same maximum prison sentence, but the potential fine is reduced. (S.C. Code §12-54-44)
Work with an Experienced South Carolina Tax Evasion Attorney Today
The IRS has a long reach and can impose penalties and garnish funds in a manner that causes problems in a hurry. So, if you are facing charges or under investigation for tax evasion, it is a good idea to start working with an experienced South Carolina tax evasion lawyer as soon as possible to begin building a defense and start working toward the best possible result.
