Click any of the below questions to watch a short video where tax attorney William Hartsock, Esq answers your questions on tax evasion
Tax fraud is the act of specifically intending to violate a known legal duty. In the event that the IRS believes that you have committed tax fraud, then they have the right to charge you under a Section 7201 Tax Evasion charge. Tax fraud is based upon badges of fraud. The IRS revenue agent during an audit, or the IRS revenue officer during a collection matter, if they determine that tax fraud occurred, then what they will do is they will look for badges of fraud.
Several badges of fraud are set forth in my website, but the more common ones happen to be double sets of books, making a false statement on a income tax return. The number one badge of fraud is the lie, the misrepresentation, the false statement, so in the event that you are ever interviewed by an IRS revenue agent or a special agent, you want to make sure that everything that you say reconciles with the books and the records to make sure that there are no false statements or no lies.
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In the event that the IRS revenue agent is asking specific questions such as why did you do a particular item. Those are questions specifically intended to determine whether you have evil motive, or a specific intent. Those are the type of questions that you have to watch out for. If you hear a why type of questions, those are the type of questions that you want to hire a tax attorney as soon as possible, because the IRS is proceeding above and beyond just a regular civil examination, and they may be looking into criminal charges at that time.