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Tax Crimes

Internal Revenue Crimes

The Sixteenth Amendment to the United States Constitution states:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

Acting upon that Constitutional authority, Congress created the Internal Revenue Service (IRS), and enacted a sprawling body of laws known as the Internal Revenue Code. This Internal Revenue Code (“IRC”) is codified in Title 26 of the United States Code. Tax crimes and offenses are defined in Chapter 75 of the Internal Revenue Code. Chapter 75 covers such offenses as tax evasion, tax fraud, and failure to pay taxes. These offenses are often referred to as “white collar crimes.

Tax Evasion

Tax evasion is treated in IRC 7201. That Section states:

Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.

Persons Required To Collect and Pay Taxes

IRC 7202 concerns itself with persons required to collect and pay taxes. One example of this would be employers required to withhold taxes from employees. Another example would be excise taxes required to be collected on the sale of items such as gasoline. IRC 7202 provides:

Any person required under this title to collect, account for, and pay over any tax imposed by this title who willfully fails to collect or truthfully account for and pay over such tax shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, together with the costs of prosecution.

Tax Returns

IRC 7203 deals with preparing and filing records relating to taxes. It states in part

Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return, keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $25,000 ($100,000 in the case of a corporation), or imprisoned not more than 1 year, or both, together with the costs of prosecution.

Tax Regulations

IRC 7203 is incredibly far-reaching because it declares that willful failure to comply with tax regulations is a felony. Regulations are not provisions passed by Congress. Rather, they are provisions adopted by the Internal Revenue Service itself. Thus, where Congress defines only a handful of acts (or omissions) that constitute tax crimes, IRS supplements it with hundreds and hundreds of regulations. Violation of any one of these IRS regulations exposes a person to a felony charge.

Tax Fraud

Next we come to IRC 7206. It relates, generally, to tax fraud, and false statements. It concerns itself with a wide range of activities:

  1. Any person who--

    Declaration under penalties of perjury.--Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter; or

  2. Aid or assistance.--Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document; or

  3. Fraudulent bonds, permits, and entries.--Simulates or falsely or fraudulently executes or signs any bond, permit, entry, or other document required by the provisions of the internal revenue laws, or by any regulation made in pursuance thereof, or procures the same to be falsely or fraudulently executed, or advises, aids in, or connives at such execution thereof; or

  4. Removal or concealment with intent to defraud.--Removes, deposits, or conceals, or is concerned in removing, depositing, or concealing, any goods or commodities for or in respect whereof any tax is or shall be imposed, or any property upon which levy is authorized by section 6331, with intent to evade or defeat the assessment or collection of any tax imposed by this title; or

  5. Compromises and closing agreements.--In connection with any compromise under section 7122, or offer of such compromise, or in connection with any closing agreement under section 7121, or offer to enter into any such agreement, willfully--

    1. Concealment of property.--Conceals from any officer or employee of the United States any property belonging to the estate of a taxpayer or other person liable in respect of the tax, or

    2. Withholding, falsifying, and destroying records.--Receives, withholds, destroys, mutilates, or falsifies any book, document, or record, or makes any false statement, relating to the estate or financial condition of the taxpayer or other person liable in respect of the tax;

    shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 3 years, or both, together with the costs of prosecution.

Filing False Returns

Finally we reach IRC 7207. IRC 7206, loosely speaking, related to falsification of tax records. IRC 7207, on the other hand, concerns itself with actual filing of such false records. Thus a person can be charged under IRC 7206 with making the records, and subjected to an additional charge under 7207 of filing those same records. IRC 7207 states:

Any person who willfully delivers or discloses to the Secretary any list, return, account, statement, or other document, known by him to be fraudulent or to be false as to any material matter, shall be fined not more than $10,000 ($50,000 in the case of a corporation), or imprisoned not more than 1 year, or both. Any person required pursuant to section 6047(b), section 6104(d), or subsection (i) or (j) of section 527 to furnish any information to the Secretary or any other person who willfully furnishes to the Secretary or such other person any information known by him to be fraudulent or to be false as to any material matter shall be fined not more than $10,000 ($50,000 in the case of a corporation), or imprisoned not more than 1 year, or both.

New Jersey Tax Lawyers

Allan Marain and Norman Epting, Jr. are criminal tax lawyers in New Jersey. Their combined experience exceeds sixty-five years.IRS tax lawyers New Jersey NJ tax crimes criminal federal tax defense Allan Marain has been named a “Super Lawyer” in six out of the last eight years. He is a member of the bar of the United States Tax Court. The New Jersey Supreme Court's Board on Attorney Certification has recognized Mr. Byrne as a Certified Criminal Trial Attorney. Both Mr. Byrne and Mr. Marain are licensed to practice before the Internal Revenue Service, the United States District Court for the District of New Jersey, the United States Court of Appeals for the Third Circuit, and the United States Supreme Court. Both are available to assist persons facing prosecution for crimes relating to tax activities.


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