The following is taken from an interview with a Maryland Federal tax fraud attorney as they discuss the unique aspects of tax fraud cases. If you have been accused of committing tax fraud on a federal or state level, call today and schedule a free consultation.
Well, a tax audit is conducted by the IRS. Audits are routinely conducted where returns are selected randomly for audit.
Now, there are certain things red flags that can potentially trigger an audit such as a huge amount of deductions or other things like that. An audit is not criminal. There are plenty of people who get audited who are never charged criminally. What may happen is that at the end of an audit the IRS could claim that the taxpayer owes more money than they paid and that could be challenged, but there’s no criminal prosecution arising out of that. Tax fraud, on the other hand, is a criminal charge that is prosecuted in federal court that is completely different from a tax dispute before the U.S. Tax Court.
You can have law enforcement officers be called or IRS agents could be called to talk about their investigation. It depends on the case, but you can have employees of the person charged, witnesses, or even the defendant themselves in some cases.
Tax fraud cases can take a while to progress before they litigate it just because there’s usually a lot of paper involved. A lot of times tax fraud cases are prosecuted over a period of years. If the government is trying to show intent, then they will go back several years of someone’s tax returns. That way if the same issue is presented over period of years, then the government may very well argue that it shows consciousness of guilt because they kept doing it.
It really depends on what the specific allegation is. If it is an issue that is limited to one of the people filing, then that could impact how the case is litigated, but if someone is filing jointly, then both people are potentially the target. It is something that has to be taken into account. The other person would need to get a lawyer and be represented.
Typically, that is the case. If someone is charged a federal tax fraud, what can happen is that state agencies can get involved and there maybe state tax fraud charges that accompany it, but typically it is just federal taxes that are the subject of it.