Unreported Income ? IRS Civil Tax Fraud and ... - Finance information

The IRS Will

Often Pursue a Taxpayer first, on criminal tax evasion, and then, civil tax fraud (otherwise, the contribuable Could assert, During the civil investigation, Fifth Amendment privilege Against historical self incrimination). If the IRS pursues civil tax fraud first and wins, They may collect civil penalties, tax and Obtain information discovery, and then Pursue Criminal Proceedings (and use the civil file to prosecute).

Civil Tax Fraud, and Criminal Tax Evasion Have different boxes:

I. Burdens of Proof

II. Statutes of Limitations (Unreported Income)

III. Penalties

IV. Collateral Estoppel (Civil / Criminal Issues)

I. Burdens of Proof (Evidentiary Standard)

a. Civil Tax Fraud: ?Clear and Convincing Evidence? (aka preponderance of the Evidence)

b. Criminal Tax Evasion: ?Beyond a Reasonable Doubt? (Higher Standard)

II. Statutes of Limitations

a. Civil Tax Fraud: No statute of limitations (tax Can Be Assessed At Any Time).

b. Criminal Tax Fraud (Evasion): The criminal statute of limitations is only on the Prosecution of the crime ie tax evasion (not the assessment of tax Owed). Generally, 3 years is the after the offense-committed.

Six (6) years for specified offenses (Including: unreported income) (IRC ? ? 6531)

Under Federal Criminal Code (Title 18 USCA) 5 years the after the commission of a crime .

The statute Begins To Run When The last acts of the Constituting the tax evasion is-committed.

III. Penalties (Unreported Income)

(a) Civil Tax Fraud

(1) Fraudulent Failure to File Tax Return (IRC ? ? 6651 (f))

15% of Net Amount of tax due for EACH month, (up to a maximum of 5 months), for a maximum penalty of 75% (of unpaid tax) (IRC ? ? 6651 (f)). This is the only penalty Imposed for failure to file.

(2) Fraudulent Tax Return (Unreported Income) (IRC ? ? 6663 (d))

Plaintiff ?s Lawyer by year of underpayment of tax (required To Be Shown is a tax return) is due to fraud, a penalty EQUAL TO 75% of the portion of the underpayment.

(3) Accuracy ? Related Penalty (IRC ? ? 6662 ( b) (1) ? (5))

A penalty at a flat rate of 20% on portion of underpayment of tax. The fraud penalty and Accuracy-related penalty Apply only for tax returns filed.

(4) Spousal Liability (IRC ? ? 6663 (c))

For joined tax return, both, Spouses are subject to joint and several liability for the tax liability Entire. The civil fraud penalty Applies only to the spouse responsible for the underpayment That Is Attributable to fraud.

(5) Failure to Pay Tax Penalty Applies To The Amount of the unpaid tax due:

Unpaid tax Shown as tax return was due (IRC ? ? 6651 (a) (2))

? percent (of unpaid tax) For Each month, up to a maximum of 25% (of unpaid tax)

Not Shown Unpaid tax due as we return (ie, unreported income (IRC ? ? 6651 (a) (3))

? percent (of unpaid tax) for EACH month up to a maximum of 25% (of unpaid tax)

Offsetting PENALTIES (IRC ? ? 6651 (c) (1))

If contribuable is linkable for More Than One of the delinquency penalties with respect to-any tax return, the Amount of the penalty for failure to file, is Reduced by the Amount of the penalty for failure to pay (Amount Shown was the return for Any month for Which Both penalties apply)

There is no offset for the penalty for failure to pay tax (IRC ? ? 6651 (a) (3)) Not Shown got due return was (ie, unreported income).

No credit is allowed option Against The civil fraud penalty for Any criminal fine Paid for income tax evasion and conspiracy to defraud the U.S.

(b) Criminal Tax Evasion (Unreported Income) (1) IRC ? ? 7201:

Criminal penalty for willful By Any Attempt to evade or defeat person Any tax or the payment of Any tax.

Conviction, Punishable:

Fine: $ 100,000 (individual) $ 500,000 (corporation)

Imprisonment: Not more than 5 years (or Both fine and he ?s doing)

(2) IRC ? ? 7203: Criminal Failure to File or Pay Taxes

Willful failure to pay tax, file a return, keep required records, or supply required information

Fine: $ 25,000 (individual) $ 100,000 (corporation)

Imprisonment: Up to one year (or Both fine and he ?s doing)

IV. Collateral Estoppel:

When Criminal Proceedings are civil proceedings Followed by, the legal doctrine of collateral estoppel may apply. This doctrine Provides Necessarily Decided That year outcome in a previous proc?dure (the 1st proc?dure) Will determines the outcome in a Subsequent Proceeding (the 2nd tribunal), aim to have only in the 2nd proc?dure Matters That Were Actually Determined and presented in the 1st proc?dure.

a. Conviction for criminal tax evasion collaterally estops the contribuable from Contesting the existence of fraud for Purposes of the civil fraud penalty Because a finding of criminal fraud (Beyond A Reasonable Doubt) establishes proof of civil fraud (by clear and convincing evidence).

b. acquittal of criminal tax evasion collaterally Does not stop the government from proving civil fraud (by clear and convincing evidence). Established That The acquittal fired, return not proof of fraud Beyond Reasonable Doubt exist, aim That Does not mean That proof of fraud by clear and convincing evidence does not exist.

div

Gary S.

Wolfe, Esq. International Tax Practice offers the Following legal expertise: IRS Tax Audits, International Tax Compliance and Asset Protection. Please see http://gswlaw.com for more info.

Article Source: http://EzineArticles.com/?expert=Gary_Wolfe

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Source: http://www.lovefinanceinfo.com/2012/08/unreported-income-irs-civil-tax-fraud-and-criminal-tax-evasion/?utm_source=rss&utm_medium=rss&utm_campaign=unreported-income-irs-civil-tax-fraud-and-criminal-tax-evasion

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