Those who live or do business in Maryland, who have been accused of failing to file their federal tax returns, or who have been charged with committing other tax-related offenses against the government, could find themselves facing serious tax fraud charges in federal court. Any tax violation is a serious matter as the penalties can involve steep fines and extensive prison time.
Given these risks, it is unwise to ignore or fail to respond to IRS investigations and requests. It is also not a good idea to respond without first consulting with a Maryland federal tax fraud attorney who is experienced in handling federal fraud offenses.
IRS’ CID investigators are federal agents who are trained law enforcement officers. Many of them are also licensed certified public accountants. CID investigations are multi-layered and initiate an investigation only when the IRS grants them permission to do so. These investigations are methodical and start with formal notification (not to be confused with an IRS audit, which requires only an informal – standard mail – notice). Such formal notices separate tax crime investigations from most other federal criminal investigations that pursue – for example – those accused of drug trafficking and possession or distribution of child pornography, all of which may begin without notice to the defendant.
This formal notice gives taxpayers – and their Maryland federal tax fraud attorneys – many opportunities to resolve the case or present evidence in the hope of convincing CID investigators that there was no intention to commit a crime. A well-qualified federal tax fraud lawyer in Maryland will look for any and all evidence to demonstrate that no tax offense of any kind, criminal or otherwise, took place.
The Internal Revenue Service’s (IRS) Criminal Investigations Division (CID) has one of the highest conviction rates of all the U.S. federal agencies. Well over ninety percent of the criminal cases it refers to the U.S. Department of Justice’s (DOJ) Tax Division result in convictions based on the following offenses:
The penalties for criminal tax fraud range up to five years in federal prison and may include fines of up to $500,000. If a person is charged and convicted, they will also be required to pay for prosecution costs pertaining to every count for which they are convicted. The amounts can range from $10,000 per count, or even higher. There are also civil penalties that may be assessed in addition to criminal liability. A Maryland federal tax fraud lawyer can explain the relationship between civil penalties and a criminal case.
The difference between tax fraud and a common mistake boils down to whether the “mistake” is intentional or not. Carelessness in filing a return is not criminal fraud, though it can be considered a civil offense. However, failure to file a return or a botched return might raise red flags.
Based on that assumption, the IRS will look for what it calls “badges” or signs that indicate fraud has occurred, providing them with justification to further investigate the matter. The more of the following badges that CID investigators identify, the greater the odds that tax fraud charges may be filed.
When the CID finishes its investigation, the case is referred back to the IRS’ Examination Division where tax liability is assessed. If additional tax and/or penalties are warranted, examiners add them before referring the matter to the Department of Justice’s Tax Division; which then determines if criminal and/or civil action is warranted.
The final step occurs when an Assistant US Attorney in the taxpayer’s district presents the case to a grand jury that must decide whether to hand down an indictment. An indictment is simply a formal document charging a person or persons with one or more criminal offenses. An indictment is issued when a grand jury has determined that there is probable cause to believe one or more criminal acts have occurred.
There are many stages to the process. This is good in the sense that it offers the accused and their Maryland federal tax fraud lawyers multiple opportunities to try to resolve the matter.
The federal government uniformly prosecutes defendants if the government uncovers evidence of a conspiracy to commit tax fraud. In order to convict persons accused of conspiracy to commit tax fraud, the government must prove all of the following:
Like any other federal conspiracy charge, the government need not prove the accused were successful in carrying out the conspiracy to sustain a conviction for conspiracy to commit tax fraud. It is sufficient for the government to prove that one or more of the conspirators committed an “overt act” in furtherance of the conspiracy. The maximum sentence for federal tax conspiracy as a stand-alone offense is five years.
However, the government often charges other companion offenses such as mail fraud, wire fraud, and money laundering, among other offenses, together with conspiracy to commit tax fraud. Thus, anyone convicted of conspiracy, plus other substantive offenses, may face additional periods of incarceration beyond five years. A Maryland federal tax fraud lawyer can help explain how conspiracy charges can impact the case and the method for building a defense.