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An Honest Mistake Is Not Tax Fraud

Tax season is once again around the corner. For many people, doing their taxes brings fear and trepidation, both because they fear they will owe money and because they are afraid of making a mistake that could result in criminal consequences. To help put you as ease this tax season, a Murfreesboro criminal defense lawyer at Bennett | Michael | Hornsby helps you to understand the difference between a tax mistake and criminal conduct related to preparing or paying your taxes.

What Is Tax Fraud?

The American tax system is a dynamic and relatively complex system that involves local, state, and federal authorities. At the federal level, thereHow much does a divorce cost are numerous criminal offenses related to taxes; however, most of them are governed by 26 U.S. Code § 7201 which makes it a crime to “willfully attempt in any manner to evade or defeat any tax imposed by this title or the payment thereof.” Examples of conduct that might qualify as tax fraud under that statute include:

  • Failing to pay taxes due.
  • Failing to file a tax return.
  • Failing to report income.
  • Underreporting income.
  • Filing a false tax return
  • Falsifying deduction.
  • Failing to disclose foreign income or assets.
  • Making false statements related to tax reporting.
  • Money laundering.

While that long list of potentially criminal conduct may sound scary, it is important to remember that the applicable statute only makes conduct criminal if it was willful conduct. While every scenario involves a unique set of facts and circumstances that should be discussed with an experienced criminal defense attorney, the overarching theme is that a mistake is not criminal conduct while engaging in any of those activities with intent is a criminal offense.

What Are the Penalties for Federal Tax Crimes?

A conviction for tax fraud under 26 U.S. Code § 7201 exposes you to a sentence that may include a hefty fine and/or imprisonment. An individual can be fined up to $100,000 per offense while a corporation faces up to a $500,000 fine for each offense. In addition, you face up to five years in jail for violating the statute if convicted. 

Does the State of Tennessee Have a Tax Fraud Statute?

Tennessee Code §67-1-804 governs tax fraud in the State of Tennessee. Under that statute, you could be convicted of a Class C misdemeanor for failing to file or pay your taxes and face up to 30 days of jail time and a fine of $50. If, however, are convicted of filing a false return with the intention of avoiding a tax, you could be convicted of a Class E felony. In that case, you face one to six years in prison and/or a fine of up to $3,000.  

What Should I Do If I Receive a Target Letter from the Federal Government?

Sometimes, when the federal government is investigating a “white collar crime,” they will send out a “target letter.” White collar crimes are crimes that are non-violent and usually financially motivated, such as tax fraud. A target letter is basically just what it sounds like – a letter informing you that you are the target of a criminal investigation. The target letter may provide the following information:

  • Notification that you are the target of a federal grand jury investigation.
  • The nature of the criminal offense being investigated.
  • A request to contact federal authorities.
  • A request to produce documents or other evidence.
  • Deadlines for responding to requests.

If you receive a target letter, do not try to destroy or hide evidence and do not discuss the matter with anyone. Instead, contact an experienced criminal defense attorney as soon as possible to discuss the investigation and your legal options.

Contact a Murfreesboro Criminal Defense Lawyer 

If you have been charged with tax fraud or you have reason to believe you are the target of a tax fraud investigation, consult with an experienced Murfreesboro criminal defense lawyer at Bennett | Michael | Hornsby as soon as possible. Contact the team today by calling 615-898-1560 to schedule your free appointment.


Stan Bennett