Texas Criminal Lawyer Blog

All about Federal Income Tax Crimes

The Internal Revenue Service Code 7201 defines income tax fraud as a felony punishable by fines, prison time, and other penalties. Tax fraud is just one of a diverse list of potential income tax crimes pursued by the IRS’s Criminal Investigations division.

Basic types of income tax crimes include:

• Failure to file a tax return
• Intentionally submitting false information on a tax return
• Taking more deductions than you are allowed
• Falsifying financial statements or other documents
• “Laundering” money so as not to have to report it to the federal government
• Claiming personal expenses as business deductions
• Storing money that should be taxed in accounts overseas and not reporting that money
• Collecting income taxes from employees and then not giving this money to the IRS

How and why the government fights back so hard against income tax crimes

According to an independent Cornell University-sponsored inquiry, income tax crimes cost the federal government close to $350 billion a year, annually. Thus, the government obviously has a huge motivation to go after individuals whom the government thinks are shirking their tax responsibilities.

To this end, the IRS runs a dedicated branch called Criminal Investigations (CI), which tracks down delinquent taxpayers. The biggest CI program is the General Tax Fraud Program, which investigates instances of money laundering, evasion, and similar crimes. Criminal Investigations also looks into allegations of financing narcotics or terrorism.

Criminal and civil penalties possible:

Taxpayers can be hit with both criminal and civil charges.

Criminal charges can lead to prison time, if a suspect is convicted. In addition, someone who fails to file an income tax can be subjected to fines of $25,000 for every year that he or she failed to file -- going back a full six years from the time that a tax return should have been submitted. For instance, if someone failed to file for tax year 2007, the government can look all the way back to 2001 in his or her records. Further, the Federal Sentencing Guidelines are based primarily upon the amount of income not claimed.

Civil charges can be similarly severe. The penalties for failing to pay can accumulate indefinitely -- as opposed to getting cut off after six years -- and perpetrators also have to pay interest on the taxes owed, which can really add up. If convicted of a federal income tax crime, you may also have to pay fines and other penalties.

Famous tax evaders

The most famous tax evader of all time is the Chicago gangster Al Capone, who was busted after investigators spent years trying to arraign him for more serious charges pertaining to his criminal enterprises. Famous modern tax evaders have included entrepreneur Martha Stewart, country musician Willie Nelson, and President Obama’s Treasury Secretary, Timothy Geithner.

If you or a loved one has been charged with a federal income tax crime, it behooves you to speak at once with a competent and trial-proven federal criminal defense attorney.

Why Choose an Attorney with Jury Trial Experience?

Searching for the perfect federal criminal defense attorney to represent you (or a family member) at trial can be an exercise in frustration. There may seem to be many apparently qualified lawyers are out there. But without deep knowledge about the background of prospective attorneys, how can you make a good decision about who should represent you?

Here is some advice to ground you: Choose an attorney with jury trial experience.

Here’s why.

1. More plea bargaining power.

Prosecutors have long memories. They personally know many of the federal criminal defense attorneys they will be squaring off against. Prosecutors fear going against experienced Federal trial lawyers because these attorneys can use their skills to make trials long, expensive, and complicated for them. Conversely, if prosecutors face defense attorneys with little to no Federal trial experience, they might be far more willing to take the battle to court.

In other words, working with an experienced trial attorney will -- ironically -- lead to smaller chance that you will actually go to trial! Rather than face off against experienced foes, prosecutors may be willing to “plea bargain” down your charges, for instance.

2. Experienced jury trial attorneys have skills communicating with judges and juries.

An experienced trial attorney knows what to say to juries and judges -- and, perhaps even more importantly, knows what NOT to say to them! If your lawyer had never gone to trial -- or has only rarely been in court -- there’s no way he’ll have enough experience with this kind of fragile and nuanced communication to get good results.

3. An experienced defense attorney knows the rules and procedures.

A jury trial is like a dance. There is a rhythm to it. Both unstated and stated rules of protocol apply. At the risk of being redundant… you can spend decades studying the formalities of jury trial defense, but until you’ve put theory into practice, you can’t provide best service.

For example, consider the art of cooking. Would you rather have a meal prepared for you by a chef who memorized a cookbook or a chef who spent five years in charge of a kitchen at a three-star Michelin restaurant?

4. An experienced attorney understands both the art and science of trial defense.

To master the game of jury persuasion, you need skills in a variety of arenas, including cross examination, jury selection, evidence presentation, redirects, opening and closing arguments, rebuttals, rules and procedures, and so forth. In some ways, a federal criminal defense attorney is only as good as the weakest link in his skill set. The only way for an attorney to find out where his true strengths and weaknesses lie is for him to go through the process many times. So, the question is, do you want to be a test case for a relatively green lawyer, or do you want an experienced old hand to guide you to your best possible defense?