Federal Tax Evasion – 26 U.S.C. § 7201

Federal Tax Evasion charges are very serious white-collar criminal allegations often charged by Federal Prosecutors in the Los Angeles area. The Internal Revenue Service (“I.R.S.”) is the primary federal agency that investigates alleged tax crimes. 26 U.S.C. § 7201 is the federal statute which sets out the crime of Tax Evasion, a form of tax fraud. To prove that someone is guilty of tax fraud, the government needs to prove several elements:

• First, that the defendant owed more federal income tax that year than they declared on their tax return;
• Secondly, the they knew they owed more tax than they declared;
• Finally, that they made a willful, affirmative attempt to evade or defeat that additional tax.

The I.R.S has its own team of investigators and peace officers charged with the detection and investigation of allegations of Federal tax fraud. In many cases, these investigators work alongside California tax authorities who will perform their own parallel investigations into allegations of State tax fraud.

Many tax fraud prosecutions are initiated after a person is reported for tax fraud by a third party. This can often arise in divorce cases or even contentions employment situations. In addition, the I.R.S. has teams of auditors and investigators dedicated to the detection and prosecution of this offense, as tax fraud and evasion costs United States taxpayers billions of dollars each year.

Prosecutors from the United States Attorney’s Office have teams dedicated to prosecuting individuals and corporations suspected of tax fraud and tax evasion. These filings are often pursued in the Central and Southern Districts of California in Federal Court. In many cases, the Federal authorities will obtain warrants for bank account or other financial records and will use these as a basis for tax evasion charges.

Violation of 26 U.S.C. § 7201 can result in a felony conviction. On conviction, a person can be fined up to $250,000 dollars (and if the guilty party is a corporation, up to $500,000) or imprisoned up to five years, or both. Furthermore, a defendant could be subject to further penalties for related offenses such as failing to file a report under 26 U.S.C. § 7203. A defendant could also be forced to pay the costs of prosecution under this statute.

There are several criminal defenses to the charge of Tax Evasion. A lack of knowledge that the tax return was deficient could negate the knowledge element required to convict under this statute. Another defense would be unreported deductions that correct the return and negate the deficiency. Another defense is that there was no affirmative act. The affirmative acts of evasion associated with evasion of payment cases almost always involve some form of concealment of the taxpayer's ability to pay the tax due and owing or the removal of assets from the reach of the IRS. Most commonly the affirmative act that prosecutors rely on in bringing these charges is a defendant filing a false return to cover conceal the true amount of owed taxes.

• California Penal Code Section 503, Embezzlement
• California Penal Code Section 496, Receiving Stolen Property
• 26 U.S. Code § 7206 - Fraud and false statements on a Tax Return
• 26 U.S. Code § 6651 - Failure to file tax return or to pay tax

Because of how serious federal felony charges are, it is imperative that you retain the best attorney you can. Los Angeles white collar crime attorney Michael Kraut was previously a prosecutor assigned to the elite White Collar prosecution team of the Los Angeles District Attorney’s Office. Now Mr. Kraut is committed to assisting his clients in every step of the process in Federal Court. Mr. Kraut aggressively protects his client’s rights and reputations. He has represented CEO’s and CFO’s who were either under investigation or charged with serious Southern California White Collar crimes in both State and Federal Court. These cases are complex and require the knowledge and skills of a top notch attorney.

For more information about Federal Tax Evasion, and to schedule your free consultation, contact Michael Kraut at the Kraut Law Group Criminal & DUI Lawyers, Inc. located at 6255 Sunset Boulevard, Suite 1520, Los Angeles, CA 90028. Mr. Kraut can be reached 24/7 at (323) 464-6453.