With the complexities of tax law, it’s easy for an individual or business to experience issues with taxation, and many unfortunately lose their livelihood and freedom as a result. In 2022 alone, the Criminal Investigation Division of the Internal Revenue Service initiated 1,388 tax crime investigations and obtained criminal sentences for 699 Americans. In addition, many Coloradans also run into trouble with the Colorado Department of Revenue’s enforcement.
If you’re being investigated for or have been charged with a tax crime, whether at the state or federal level, it’s crucial to have experienced legal protection. Goldman Law is a reputed criminal defense firm in the Greater Denver area with over 25 years of combined experience. Whether you’re an individual taxpayer, a small business, or a large corporation, we have the skills, in-depth knowledge, and legal resources to defend you.
Consult with our top-quality attorneys – call (303) 656-9529.
What is Tax Fraud?
“Tax fraud” refers broadly to the various ways that someone might intentionally avoid paying taxes. Given this definition, many people ask, “What is the difference between tax fraud and tax evasion?” The main difference is that tax fraud is a broad umbrella of intentional tax crimes, while tax evasion is one of the crimes under this umbrella. Other wrongdoings that are considered tax fraud include tax preparer scams and making frivolous tax claims.
Tax fraud is a felony that’s heavily punished by the federal justice system. Penalties for a single count of tax fraud include up to five years in prison and up to $250,000 in fines. The court may also order the convicted to pay restitution or money owed, plus the court fees for the parties involved, including the prosecution.
IRS Investigation: How Someone Can Be Charged With Tax Fraud
To detect a potential violation, IRS employees look for indicators or “badges of fraud,” which include:
- Understating income or concealing assets
- Failure to file income tax returns
- Filing false documents
- Insufficient records
- Destroying books
- Irregular business practices
- Failure to make estimated tax payments
- Engaging in illegal activities
- Attempting to hide illegal activities
- Dealing in cash
- Inconsistent or implausible explanations of behavior.
The IRS has all sorts of ways to discover these badges in a taxpayer’s conduct. Besides the keen eyes of their auditors and collecting officers, the agency often receives tips from the public and from other law enforcement agencies.
Once an IRS employee finds a potential fraud case, they’ll forward it to their special agents, supervisors, and Fraud Technical Advisors. They’ll analyze the taxpayer’s info, looking for enough substance to hand the case over to the Criminal Investigation (CI) unit. CI agents then use further investigative techniques to build the case, such as surveilling the target, interviewing family and friends, subpoenaing the target’s bank, and executing search warrants.
If the CI division finds that the case should be prosecuted, they’ll bring it to the Justice Department to charge the taxpayer with the crime.
Remember that tax fraud is intentional wrongdoing. Just because the IRS has found badges doesn’t mean the taxpayer committed tax fraud. Investigators still have to show that the taxpayer willfully violated the Tax Code, and only then will the prosecution bring a tax fraud charge.
Tax Crimes in the State of Colorado
Besides federal tax investigations by the IRS, Coloradans may also be subject to investigation by the Colorado Department of Revenue (CDOR). The CDOR has its own Criminal Investigation/Tax Enforcement section that examines and assists in the prosecution of state-level tax violations. These offenses include:
- Tax evasion
- Failing to file tax returns
- Underreporting income
- Submitting false tax forms
- Claiming excessive deductions
- Tax preparer fraud.
State-level tax investigations are similar to that of the IRS. Willful tax evasion is a Class 5 felony in Colorado, with potential penalties that include a maximum prison sentence of three years and a maximum fine of $100,000 for an individual taxpayer.
What to Do If You’re Being Investigated for a Tax Crime
It can be daunting to receive communication from a tax investigator, whether it’s from the IRS or the CDOR. Here are steps you can take to protect your rights and start building your defense.
Contact an attorney.
As soon as you can, get legal protection from a reliable tax defense attorney. We emphasize the urgency of having a lawyer because once a criminal investigator contacts you, it means the case has already started gaining traction for the revenue office or the prosecutor. They already have preliminary information about you, and now they have further power to build their case against you.
Refuse to speak to investigators without your lawyer.
Criminal tax investigators are trained to ask questions that can improve their case. Many taxpayers make innocent mistakes in interviews with tax agents. You would be well-advised to decline a conversation with tax investigators until you have your attorney’s guidance.
Avoid relying on accountants for defense.
Some people believe that they can iron out their criminal tax issues by working with a CPA or with tax specialist companies. In reality, talking to other parties about the possible criminal case can be damaging to you, as these other parties can be called in as witnesses against you. Even if you had retained your CPA for a long time before Special Agents approached you, your working relationship with any non-lawyer is not protected by attorney-client privilege.
It’s best to entrust your case to a criminal defense attorney practicing in tax law. On top of providing sound legal counsel to you during the investigation, your lawyer can represent you if the case proceeds to litigation.
Why You Should Call Goldman Law for Tax Crime Defense
At Goldman Law, our criminal defense attorneys have a proven track record of defending the freedoms of Colorado citizens even in challenging white-collar cases. We have a solid background in taxation in both the state and federal levels, and we are experienced in tax investigation resolution, jury trials, and bench trials.
Work with Goldman Law if you are:
- Being investigated by the IRS or the CDOR
- Facing a tax crime charge
- Trying to get a tax lien released
- Appealing your criminal tax case
- Facing other tax controversies with the IRS or the CDOR.
Don’t hesitate to call us at any point of your case, from the administrative investigation stage to the criminal tax trial and sentencing, all the way to appeals, if necessary. We can find multiple opportunities to protect you from the severe punishments of a tax crime conviction, and we have the strategic skills and resources to maximize those defense opportunities.
Contact Goldman Law – Top-Rated Criminal Tax Lawyers in Denver
Numerous Coloradans have obtained Not Guilty verdicts, light sentences, and dismissed charges through the legal service of Goldman Law. See how we can help you with your tax case. Call (303) 656-9529 today to schedule your consultation.