Trying to pay as little in the way of federal income taxes is usually not a crime. Federal charges could result when someone goes beyond legitimate methods to minimize taxes and attempts to hide income. The long-term consequences of a conviction in federal court can affect a Pennsylvania resident’s personal life and financial well-being if tax avoidance turns into tax evasion.
When the government files federal charges following an investigation of someone based upon allegations of tax evasion, the person’s intent is a key element of the crime for both the investigators and defense counsel. Tax returns and the tax laws are complicated, so people can, and frequently do, make mistakes. An honest mistake that reduces a person’s tax liability is usually not enough to warrant charging someone with committing a federal crime. Tax fraud occurs when an individual or business intentionally understated income or deliberately and knowingly took some unlawful action to underpay taxes.
Examples of fraudulent tax practices might include failing to file a tax return, concealing income or claiming unauthorized credits and deductions. A business owner who fails to report cash transactions as income might be targeted for investigation by the Internal Revenue Service. Taxpayers who make unintentional mistakes would probably have to pay interest and penalties in addition to the unpaid taxes, but a person who deliberately engages in fraudulent conduct could end up in prison.
An investigation by the IRS might lead to a taxpayer’s arrest, but federal charges are allegations that must be proven by prosecutors. Individuals or businesses confronted by allegations of wrongdoing in federal court have the right and opportunity to be assisted by counsel in mounting a defense in order to avoid the penalties and long-term consequences associated with a criminal conviction.