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Understanding tax fraud

In the United States, tax law can be incredibly difficult to understand. That is because while the country has a number of laws on the books that punish people for attempting to evade taxes through fraudulent means, it remains perfectly legal to attempt to avoid taxes by structuring your business ventures in ways that make use of the various safe havens and incentives in the law. The line between the two activities can often seem unclear, though, so it can be helpful to know exactly where the IRS draws the line if you are going to be responsible for business taxes.

How the IRS defines tax fraud

There is a number of statutes that describe criminal tax fraud and negligence, and the penalties are divided by the relative difference in severity between the two. Companies and individuals are considered to be committing tax fraud if they do the following:

  • Attempting to evade payment of taxes that are legally due
  • Willfully failing to pay over taxes that are due on behalf of an employee
  • Willfully using false information to cover for tax avoidance
  • Failure to keep required tax records
  • False statements on tax documents on behalf of you or another
  • Conspiring with others to do any of the above

While it might be perfectly legal to seek out every opportunity to minimize the amount you have to pay in taxes, you do need to be sure that no activity crosses these lines.

It is also a good idea to work with an attorney who understands tax law whenever you set up your new investment structures or you make moves that are designed to minimize your tax obligations. By running those deals past a lawyer with the right experience to advise you about whether or not they are likely to run afoul of the law as it is currently written. By knowing those things in advance, you can help minimize your chances of having any contact with law enforcement surrounding your taxes.

If you are arrested

If you are charged with tax fraud or negligence, then you need to talk to a tax attorney who can help you sort out the various options available to you. An experienced attorney will know how to present a defense that demonstrates how your strategies were designed to fall within existing laws and how to properly locate liability when there have been transgressions committed on your behalf and without your knowledge. No matter what your situation is, legal counsel with a long history of handling tax cases will be essential.

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