California Tax Evasion Penalties

Like many taxpayers in California, you may have made a few errors on your tax return that may or may not have given you extra money back on your return. Or, you may have avoided reporting or forgot to report some information on your return. Unfortunately, even the slightest of errors on taxes can cause a taxpayer to be accused with tax evasion, which can lead to serious consequences and even criminal charges that may require an experienced California tax lawyer to step in and assist with.

If you were accused of tax evasion by the IRS, below is some important information that can help you avoid severe penalties and incarceration.

What is tax evasion?

Before you try to contest or seek legal counsel, it’s necessary to understand what exactly you are being charged with. Tax evasion is considered by many to be a white-collar crime, and involves the illegal evasion or deliberate misrepresentation of tax information by consumers, corporations, or trusts. Tax evasion can include a number of actions, such as declaring less income on a return than what was actually earned, a company reporting lower profits, or filing for deductions that the taxpayer was ineligible for. Regardless of the specific circumstances, those accused of tax evasion will require criminal defense to contest their charges.

What leads to a tax evasion charge?

Whether you deliberately left some information out when filing taxes because you didn’t think it was relevant (or thought you may not get caught) or because you actually made an honest mistake while rushing to file taxes before the deadline, it is in every taxpayer’s best interest to consult with an experienced tax attorney after being accused of tax evasion.

After taxes are filed, the IRS undergoes a lengthy process to review each return and check for errors. Many times, the government will inform the taxpayer or company that a mistake was found on the return, and allow the individual or corporation the chance to fix them on their own. Then, there are times when the IRS will take it upon themselves to correct what they believe to be a mistake on their own. When this happens, the taxpayer will receive a letter from the IRS detailing the nature of the error and what the government has done to fix these mistakes.

At this point, taxpayers may be notified that, due to the mistake, they actually owe money to the IRS and will be given a certain amount of time to pay their tax debt, plus any additional late fees or penalties accrued. This is actually quite common and not something that will necessarily result in serious consequences or criminal charges. The individual or corporation will just be required to pay what they owe in a lump sum, and if they are unable to, can request a payment plan. However, if the IRS accuses you of tax evasion, that’s when things get serious.

Unlike the instances in which the IRS informs a taxpayer that they’ve made a mistake on their return (which they may acknowledge was due to human error), if the government actually accuses someone of tax evasion, they are accusing said person or company of purposefully omitting or manipulating information on their return, and thereby, committing a crime.

Why seek help with a tax attorney?

In California, those convicted of tax evasion can be ordered to pay a fine of up to $20,000 and may also be sentenced to one year (or more) in jail or prison. The best way to avoid these penalties is to file an amended return as quickly as possible if you realize you made a mistake, as the fees will be much lower. However, if you did not file an amended return and have been accused of tax evasion, the next step is to hire a California tax attorney to ensure your rights are protected and to obtain the best possible legal defense for your case.