What Is Income Tax Fraud? | Worgul, Sarna & Ness, Criminal Defense Attorneys
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What Is Income Tax Fraud?

As the income tax deadline quickly approaches this April, it is time to ensure your current taxes are in order. Sloppy mistakes or misunderstandings regarding the income you are required to declare to the Pennsylvania Department of Revenue or U.S. Internal Revenue Service (IRS) can cost you a great deal of trouble down the line. A missing zero, misplaced comma, or unreported wages could lead to an audit, interest, and fines, or worse – criminal charges for income tax fraud. The state and federal government take taxes seriously, and if they believe you are trying to get away without paying, they will seek to punish you to the fullest extent of the law.

If you are currently facing issues regarding your previous tax returns, including accusations of fraud, contact a Pittsburgh fraud attorney immediately. State and federal tax codes are complicated and people often make mistakes on their returns. That does not mean you should face criminal punishments. We can help you correct this error, defend against criminal charges, and get back to your regular life.

Call us today at (412) 281-2146 to schedule an initial consultation.

Common Examples of Income Tax Fraud

There are multiple errors that could lead to tax fraud charges, including:

  • Underreporting your income
  • Not reporting certain types of taxable income, such as wages from a second job
  • Taking deductions you are not entitled to
  • Claiming personal or business expenses you did not incur
  • Not declaring assets you owned or sold during the relevant fiscal year
  • Not reporting or underreporting interest earned on income and assets

In order for an action to be tax fraud, it must have been intentional and for the purposes of retaining or receiving funds to which you did not have a right.

Pennsylvania’s Income Tax Fraud Law

Title 61: Revenue, Chapter 119: Liabilities and Assessment of the Pennsylvania Code addresses your duties in regard to paying taxes. You are required to provide information regarding your taxable income so that the federal and state governments can assess how much you owe. You are then required to pay your tax liability, or if you are lucky and overpaid throughout the year, you may receive a refund. If you are found to have left off reportable income or submitted a fraudulent return in some way, you can be charged an extra 5 percent, 25 percent, or more. According to section 119.22, if you underpay your tax liability for any reason related to fraud, then an amount equal to 50 percent of the underpayment will be added to what you owe.

While these fees are administrative punishments, you can also be charged with misdemeanor or felony offenses under state law for a fraudulent income tax return. Under Title 61, Chapter 35: Tax Examinations and Assessments, willfully filing a fraudulent return can result in a misdemeanor offense, punishable by up to three years in prison and a fine up to $2,000. Other acts of fraud in relation to your tax returns and payments may also be a misdemeanor offense, punishable by up to one year in prison and up to a $1,000 fine. If you are charged with theft from the Pennsylvania government in relation to your fraudulent return, then you can be charged with another misdemeanor or felony.

You Could Face Federal Tax Fraud Charges

If you submitted a tax return with mistakes, you could also face federal charges that would result in harsher punishments. When you file your income tax return, you give your word to the government that it contains accurate information. Under 26 U.S. Code Section 7206, if you provide false or inaccurate information with the intent to defraud the government, then you can be charged with a felony offense, punishable by up to three years in prison and up to a $100,000 fine. You will also face financial penalties up to 75 percent of the underpayment related to fraud.

Fraud is Not the Same as Negligence

There is a significant difference under the law between intentionally trying to defraud the government and making a simple mistake on your taxes. If you made an innocent error, the state and federal governments will want it corrected and you may have to pay interests or fines. However, negligent mistakes on your tax returns do not typically lead to criminal charges – intentional misrepresentations do. For prosecutors to bring and prove tax fraud charges against you, they must show that you had the intent to defraud and took knowing steps toward doing so.

Contact a Pittsburgh Fraud Attorney to Defend You

There are a number of ways to defend against tax fraud or tax evasion charges, including that you had no intent to defraud the government or that you were unaware of the fraudulent activity. For instance, you may have proof that you made an innocent mistake on your returns. You may also have evidence that your accountant, employees, spouse, or business partners knew about the inaccurate information while you did not.

Whatever your situation, our criminal defense attorney are here to help. We will analyze your situation and build the strongest defense available under state and federal law.

Call us today at (412) 281-2146 to schedule a free initial consultation.

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