Federal and Texas Tax Evasion Lawyer

The U.S. tax system is loosely based on the concept of voluntary compliance which makes it the responsibility of each taxpayer to report all their income. There is an important distinction made by the IRS between “tax evasion” and “tax avoidance.” Tax evasion involves purposely and knowingly failing to report all or some of your income. Tax avoidance, on the other hand, is legal, involving claiming deductions, credits, and adjustments to your income. If you engage in tax evasion, the IRS can assess a penalty, collect the back taxes, and, in some cases, pursue criminal charges.

Interestingly, many Americans actually pay more than they legitimately owe because they are afraid of accidentally not paying enough and being pursued by the IRS. If the IRS has notified you that they believe you have engaged in tax evasion, it is important that you speak to an experienced tax evasion lawyer from Whalen Law Office. We are a Texas and federal defense firm, so regardless of where you are located, we can help you with your tax evasion issues.

What Does a White-Collar Criminal Defense Lawyer Do?

Tax evasion falls under white-collar crime but is a criminal offense. A white-collar criminal defense lawyer is well-versed in all criminal laws and procedures. White-collar crimes are non-violent, usually involving financial gain through some sort of fraud. Embezzlement, healthcare fraud, mortgage fraud, money laundering, securities fraud, credit card theft, identity theft, and mail and wire fraud are just a few examples of white-collar crimes. A knowledgeable white-collar criminal defense lawyer does the following for clients accused of a white-collar crime—including tax evasion:

  • Protects defendants against violations of the criminal justice procedure, including coerced testimony or confessions
  • Formulates and presents defenses that mitigate criminal liability
  • Represents clients during the investigation stage by being present when statements are taken or other evidence is gathered by the government to ensure proper procedures are followed
  • Works with governmental authorities regarding restitution or plea bargains that can potentially reduce penalties
  • Represents the defendant in court, providing facts, evidence, and arguments on behalf of the defendant
  • Summons and questions witnesses, experts, and other relevant participants
  • Filing an appeal, when necessary to overturn or limit an unfair ruling

White-collar crimes can cause significant damage to your reputation and your finances and can result in jail time as well. It is imperative that you speak to a tax evasion lawyer as soon as you know you are under investigation to ensure your rights, freedom, and future are properly protected. Our attorneys at Whalen Law Office are highly skilled white-collar criminal defense attorneys with significant experience in tax evasion cases.

Tax Evasion Crimes Facts and Statistics

According to balancingeverything.com, while many countries struggle with tax evasion, the United States loses the most money each year from tax evasion at almost $190 billion. The following statistics may surprise you:

  • American corporations underreport about $41 billion per year.
  • More than 68 percent of all tax offenders in the U.S. are men.
  • 84 percent of all tax fraud cases fall under tax evasion, costing the U.S. about $386 billion per year. About 68 percent of those pursued by the IRS for tax evasion are individuals.
  • More than 80 percent of tax evasion offenders the IRS pursues have little or no prior criminal history.
  • The penalty for tax evasion or tax fraud in the U.S. depends on the type and severity of the offense. An offender could potentially receive jail time from one to five years, and fines of up to $250,000 for individuals or $500,000 for corporations.

What Are the Potential Penalties in Texas for Tax Evasion?

Taxcure.com found that out of 2,300 tax convictions made in 2022, 2,043 taxpayers were incarcerated (“incarceration” includes jail time, home confinement, and electronic monitoring. While most tax evasion cases end in civil penalties, like fines, occasionally a tax evasion case is reported to the Internal Revenue Service Criminal Investigation Unit. The penalties for tax evasion include up to five years in jail and up to $100,000 in fines, but be aware that tax evasion is not the same thing as filing a false tax return, which carries up to three years in prison and up to $100,000 in fines.

Filing a false tax return is always considered fraud, therefore, always results in felony charges. Tax evasion occurs when illegal means are used to avoid paying some or all of your taxes, usually through underreporting of income. Willfully failing to pay estimated taxes or keep records is a misdemeanor offense that usually results in civil tax penalties being assessed, although you could potentially face up to one year in jail and up to $25,000 in fines and fees.

What are Some Tax Fraud “Red Flags”?

There are certain “red flags,” that result in the IRS taking a hard look at you and your tax information. These include the following:

  • Assets and/or cash in other countries. Legally, you must report all foreign accounts with total cumulative balances of more than $10,000 at any time during the year.
  • Significant investment income.
  • Large cash deposits often trigger a closer look by the IRS. When you are depositing large amounts of cash (more than $10,000) on a regular basis, the IRS will wonder where the money is coming from—especially if you fail to report that cash when you file your income tax. The IRS is notified whenever you make a large deposit over $10,000, so be prepared to justify that money when you file your taxes. Smaller deposits that are less than $10,000 but together are over the threshold must also be reported if the bank has any idea that the money may have come from illegal activity.
  • Your number of itemized deductions is above the norm. This is another red flag for the IRS, especially if you are spending more money and claiming more deductions than most people in a similar financial situation.
  • If you are self-employed, particularly when you are the sole proprietor of your own business, you are entitled to tax deductions, including home office deductions, deductions for meals and travel, and mileage deductions. However, if your deductions seem high for your profession, an audit may be triggered. As an example, suppose you have a photography business and are the sole proprietor of that business. If most people with photography businesses spend 10 percent of the pre-tax income on “business travel,” but you are claiming 35 percent, your return could be flagged for an audit.
  • The IRS considers your “business” a “hobby” rather than a business. If you have not shown a net profit from your business in at least three of the last five years, the IRS views your business as a hobby.
  • Your business is home-based. Those who claim home office deductions are likely to undergo more scrutiny than those who do not. A home office area must be used only for your business.
  • Your business is mostly cash-based. Restaurants, bars, car washes, salons, and taxi services are the businesses most likely to be paid in cash as often as not. The IRS simply assumes that when a business receives a significant amount of their income in cash, they are likely not reporting all of that income.

Do I Really Need a Tax Evasion Lawyer for My Charges?

If you’ve been notified by the IRS that you are being charged with tax evasion, you absolutely need a highly skilled tax evasion lawyer to guide you through the process. Federal prosecutors have tremendous resources at their disposal, and you need an experienced, resourceful legal team in your own corner. Your tax evasion lawyer from Whalen Law Office will ensure your rights are protected from start to finish. We will conduct a comprehensive investigation that will show whether any evidence against you was improperly obtained. We will aggressively protect your rights and will determine whether:

  • The charges against you are due to an honest mistake on your part, perhaps caused by a misunderstanding of the tax rules, or even a mistake caused by carelessness, with no intent to defraud the IRS
  • The fraudulent part of your tax return was made by others, such as a paid tax preparer, and you were completely unaware of any errors
  • You did make misleading statements on your tax return, but there are extenuating circumstances, warranting a plea deal that involves paying back the money to the IRS

How Can a White-Collar Criminal Defense Attorney from Whalen Law Office Help?

Whalen Law Office can help those charged with tax evasion, whether you live in Texas, or elsewhere in the United States. We are a federal defense firm in Texas that handles both state and federal criminal charges, including charges associated with white-collar crimes. If you need a tax evasion lawyer, we believe you will find that we can provide everything you require from a law firm. When your freedom and your future are at stake, you need a highly experienced criminal defense attorney, particularly when you are going up against the federal criminal justice system. Contact Whalen Law Office today.