Tax evasion penalties in Michigan are no laughing matter. It’s easier than you might expect to get yourself into trouble with the Internal Revenue Service (IRS). The main thing is not to be negligent, because legally speaking, it’s no excuse. Stay on top of your taxes.

Don’t procrastinate and don’t avoid opening the mail for fear of what you might find. If you live in Michigan and find yourself in tax trouble, call Ayar Law today at (248) 262-3400 for a free and confidential consultation.

Understanding Tax Evasion

When it comes to committing a tax crime, they are referred to tax fraud or tax evasion. They typically will fall into one of two different categories:

•     Crimes related to the filing of the return
•     Crimes related to the failure to file a return

Income tax evasion is different from tax fraud. Tax evasion happens when a person does not file a tax return when they are required to in order for their tax filings to be complete and accurate. The types of offenses where you can be convicted of tax evasion include:

•     Not filing a tax return every year
•     Overestimating your expenses or deductions
•     Claiming false deductions
•     Making false statements when being audited or investigated by the IRS
•     Not collecting employment taxes
•     Using personal expenses to claim on business returns

Understanding Tax Fraud

Tax fraud is “cheating” on a tax return to avoid having to pay the obligation by making it appear as if you earn less than you actually do. Tax fraud is also known as forgery, offering a false instrument for filing, or, if the fraudulent amount is large enough, grand larceny.

Tax fraud can apply to both individuals and companies. As we mentioned, when it comes to tax evasion and tax fraud, ignorance of the law is no excuse.

Understanding The Penalties

For tax evasion or fraud, individuals and companies can expect either civil and or criminal penalties depending on their unique circumstances. Tax violations are strictly enforced by both the state of Michigan and the federal government.

Just because a person is audited after filing a tax return does not mean they are under investigation for a tax-related crime.  Audits are randomly conducted of federal returns. However, a serious investigation will take place for any returns where discrepancies are noticed by the IRS.  At the federal level, tax evasion must be proved beyond a reasonable doubt in order to move forward with the prosecution of a case.

When an investigation is being conducted at the federal level, an agent must find evidence of wrongdoing.  An investigator must show there is a discrepancy on the amount of taxes paid and there must be evidence that the taxpayer attempted to willfully or knowingly evade paying their owed taxes.

An investigation can ultimately lead to criminal charges or civil penalties.  A person who faces a civil sanction will often be forced to pay a penalty. In contrast, an individual who is under criminal investigation could be facing serious jail time and fees if convicted of a charge.

Often defendants will have to repay what they owe, plus pay a fine and serve possible prison time. You can appeal an audit, of course, though this brings with it the need for experienced legal help.

Have questions? Contact Venar Ayar.