Tax Crimes in North Carolina
The United States Government Accountability Office (GAO) found that intentional tax evasion and unintentional errors results in approximately $458 billion in lost revenue annually. To combat this, the Internal Revenue Service (IRS) has increased prosecution and penalties for those accused of failing to file a tax return, making a false statement on tax returns, failure to pay employment taxes, and other federal tax crimes.
At Kurtz & Blum, our team has more than 40 years of experience helping individuals who’ve been accused of tax evasion, racketeering, extortion, tax fraud in NC and other tax crimes. Below, we’ve provided some helpful information about tax fraud. Our team is standing by to assist you if you’ve run into trouble with the IRS. Contact us right away for help.
What Is Tax Fraud?
Tax fraud is the crime of intentionally and willfully attempting to evade income tax laws or defraud a tax-collecting agency. Tax fraud can involve your federal taxes, state income taxes, or both, depending on the circumstances of your case. Unintentional tax errors are generally not considered fraud, as long as you can show that you made the error by accident.
Types of Tax Fraud
Here are some examples of tax fraud:
- Identity theft – A common identity theft scheme is to steal someone’s Social Security number or other personal information, then file a tax return on their behalf and claim their refund. Doing this defrauds both the person whose identity was stolen as well as the tax-collecting agency because the criminal is claiming money that does not belong to them.
- Falsely claiming zero wages – Income taxes are based on the wages you report in a given year. If you claim that you didn’t earn any wages, you may not have to pay any income taxes. This becomes tax fraud if you do not report required income when you file your income tax returns.
- Misuse of trusts – There are a variety of ways in which trusts can be misused to illegally lower someone’s tax burden, such as transferring ownership of certain assets to other individuals or under-reporting income. All trusts must comply with state and federal tax laws if the owners of the trust want to avoid being accused of tax fraud.
- Phishing – Phishing involves tricking someone into giving up their personal information so that another party can use it to commit tax fraud. Usually, this involves filing a fake return on the victim’s behalf, but there are other schemes that criminals may try.
- Return preparer fraud – Shady tax preparation agencies sometimes commit tax fraud by claiming excessive exemptions, false deductions, or overinflated business expenses to improperly boost their clients’ refunds.
- Hiding income offshore – One way individuals or businesses try to avoid paying their fair share of income taxes is to try to hide the income in an offshore bank account. While there are ways to do this legally, be sure to follow all required state and federal regulations.
- Disguised corporate ownership – Some businesses try to avoid their tax burden by setting up their ownership structure in such a way that it’s difficult to know where the business is actually based and who’s running it. This allows businesses to underreport income, claim false exemptions, and engage in other fraudulent schemes.
What is Willful Failure to File or Pay State Income Tax?
State income tax violations in North Carolina generally fall under the crime of willful failure to file or pay state income tax. A person is guilty of this crime if they are required to pay taxes and willfully choose not to pay the taxes they owe, file a return, keep necessary tax records, or supply any other information required by law to make sure their taxes are assessed correctly. This crime is a Class 1 misdemeanor, and the penalties can include steep fines and up to 120 days in jail.
Speak to a North Carolina Lawyer Today
The experienced North Carolina criminal defense attorneys at Kurtz & Blum are committed to helping individuals and business owners who’ve been accused of tax fraud. The sooner you call us, the faster we can help you reach a resolution to your situation. Call us or reach out to us online right away. When you hire a criminal defense lawyer at Kurtz & Blum, you get the whole team.
Seth A. Blum is a graduate of Tufts University and Duke Law School. He also holds a Master’s Degree from the Terry Sanford Institute of Public Policy Studies. Seth is an experienced trial attorney who is licensed and has tried cases in both North Carolina State and Federal Courts. Seth is an Adjunct Professor of Trial Advocacy at the University of North Carolina School of Law. He regularly teaches other lawyers advanced trial techniques.