Tax fraud is the intentional falsification of information on a tax return in hopes of paying less than the entire tax obligation, and if the IRS can prove intention, it is always a felony in New Jersey.
The State of New Jersey takes tax fraud very seriously. The belief is that tax fraud harms all of society, therefore, the State of New Jersey, through its Division on Taxation, encourages its citizens to report any suspected tax evasion or fraud using a website specifically designed to make reporting easy.
What Is Tax Fraud?
Tax fraud involves the deliberate misrepresentation or omission of data on a tax return. In the United States, taxpayers are bound by a legal duty to file a tax return voluntarily and to pay the correct amount of income, employment, sales, and excise taxes. Failure to do so by falsifying or withholding information is against the law and constitutes tax fraud.
Tax fraud is investigated by the Internal Revenue Service (IRS). Examples of tax fraud include:
- Willfully failing to report all income received.
- Claiming to be a resident of another state.
- Filing a fraudulent return.
- Failing to file State income tax returns.
- Opening and closing of new businesses to evade taxes.
- Preparing records that understate income or overstate expenses of a business.
- Failing to turn over collected, withheld tax.
- Cigarette Tax Act violations (unlawful sales, possession, or transportation; counterfeit tax stamps)
- A tax preparer suspected of breaking New Jersey tax or criminal laws.
Tax Fraud vs. Tax Evasion
Many people believe that tax fraud and tax evasion are the same–they are not. Tax evasion is a type of tax fraud that involves the use of illegal methods to conceal income or information from the IRS. Some examples of what would be considered tax evasion include:
- Hiding income for illegal activities from the IRS
- Concealing cryptocurrency profits
- Omitting of income earned abroad
- Making under the table payments to employees
- Failing to report income earned from an all-cash operation
Tax evasion is a felony punishable by up to a $100K fine, ($500K in the case of a corporation), or less than 5 years of imprisonment, or both, plus the costs of prosecution.
Quick Facts About Tax Fraud Offenses
In FY 2021, 57,287 Cases Were Reported to the U.S. Sentencing Commission.
370 of those cases involved tax fraud.
Tax fraud offenses have decreased by 38.1% since FY 2017.
The top five districts for tax fraud offenders were:
♦ District of New Jersey (22)
♦ Central District of California (21)
♦ Northern District of Illinois (14)
♦ District of Massachusetts (12)
♦ Southern District of New York (11)
Punishment
• The average sentence for tax fraud offenders was 14 months.
• 63.3% were sentenced to prison.
• 1.6% were convicted of an offense carrying a mandatory minimum penalty; of those offenders, 33.3% were relieved of that penalty.
Considerations Taken in Tax Fraud Cases
The federal government knows that mistakes happen, and if intent cannot be proven beyond a reasonable doubt and other criminal activity is not present, charges will not be filed. However, the government is not so easy on those who make mistakes either. Although rare, even unintentional mistakes, when it comes to taxes, can result in a 20 percent penalty to the taxpayer.
Why Do I Need a Lawyer if I am Accused of Tax Fraud?
When it comes to tax fraud charges, intent is everything. The government must prove that you intended to commit the fraud. If you did not intend to defraud a person, government entity, or company, you should not face criminal charges. This is why having an experienced criminal defense attorney representing you is so important.
A knowledgeable criminal defense attorney will work hard to raise questions against the prosecution. The Law Offices of Robert J. DeGroot has over 40 years of experience defending those accused of crimes in the State of New Jersey. If you or someone you know has been accused of fraud, reach out to us for a personalized and professional approach to your case.
The Law Offices of Robert J. DeGroot is here to defend your rights! Contact us for a confidential consultation.
