I. Generally
“Tax evasion” as it is generally called, is prosecuted in federal court as a felony offense that is either actually evasion of the payment of federal taxes, or the failure to file a federal income tax return. The government has to prove willful intent to evade taxes, and such a case is targeted and prosecuted not just because the Internal Revenue Service determines that a person owes more money in taxes than claimed, but the evidence is usually tends to show that there is a large amount of income that the person did not report for tax purposes and/or there is a pattern of continued non-reporting a percentage of income that is more than minor. These investigations are time consuming and take months or years to complete. Tax evasion and related investigations are conducted by federal agents of the Internal Revenue Service’s Criminal Investigation Division. These cases are investigated and prosecuted by the United States Attorney’s Office, that is, the federal prosecutor’s office. The U.S. Department of Justice’s Tax Division may also be involved in the prosecution of some criminal tax cases.
II. Charges
Tax evasion and related criminal offenses are found in Title 26 of the United States Code, although most federal criminal offense statutes are found in Title 18 of the U.S. Code. Charges sought by the U.S. Attorney are often: 1) Tax Evasion; 2) Filing a False Tax Return; 3) Failure to File a Tax Return; and/or 4) Money Laundering.
III. Indictments
Indictments charging criminal tax evasion or tax fraud sometimes contain forfeiture provisions, as do Indictments for other cases in federal court. A forfeiture provision provides that an order of forfeiture is granted if the defendant(s) are found guilty of the charges, thereby giving the U.S. Attorney’s Office the ability to seize and forfeit property that was purchased, or partially purchased, with illegally obtained monies. Also, these forfeiture orders usually contain a “substitute assets” provision, allowing the U.S. Attorney to seize other assets that the defendant owns that does not have a mortgage or lien, in order to forfeit them for the government’s benefit, with the proceeds of the sale going to the U.S. Department of Justice.
IV. Investigations
Investigations are document intense and include numerous records that the agents compile after: 1) subpoenas are issued and served for bank records and other records, such as records of real estate purchases and other asset acquisitions; 2) search warrant executions of businesses, residences, and safe deposit boxes; 3) a financial analysis of the defendant related to his financial condition and the amount of assets he owns or controls; and 4) records of straw acquisitions by others who may hold assets for the defendant so the does not have certain properties in his name.
V. Sentencing
Any person convicted of tax evasion, tax fraud or other similar charges in federal courts is subject to the same type of sentencing as in other federal cases. These sentencing are influenced greatly by the U.S. Sentencing Guidelines, taking into consideration the recommendation punishment range from the calculations of the U.S. Sentencing Guidelines.
