Involvement in tax fraud can lead to serious financial penalties and prison. The Internal Revenue Service (IRS) uses specific terms to discuss and investigate fraud which are worth understanding from a compliance and litigation perspective.
Earlier we discussed badges of fraud—the indicators that the IRS looks at for identifying tax fraud or crime during an audit or criminal tax investigation.
Just as an IRS auditor or agent understands indicators of fraud and the meaning of willfulness, the agency uses terms of the trade to discuss evidence and evidence types needed for conviction. Understanding how the agency uses legal terms can give you insight during an audit or tax investigation. Consider the following:
- Evidence: One of the most important things a taxpayer should know is the type of evidence used and needed by the IRS. While we all generally understand evidence as material, data, or testimony that can serve to make a point or convict a defendant, the IRS considers whether evidence is direct or circumstantial. Of highest value is direct evidence, which can directly prove an allegation. This could be a fact witness involved with a fraud. Circumstantial evidence is that upon which something can be inferred, rather than directly proven. That said, an inference is a reasonable, logical conclusion that can be drawn by the facts of a matter.
- Presumption of Law: This concept is that the rule of law will generally be inferred by a jury or judge unless that inference can be proven otherwise or disputed.
- Burden of Proof: In cases involving tax crimes, the government has the responsibility to prove their case to the jury or judge. This could be accomplished through a preponderance of the evidence. A preponderance of evidence describes evidence presented that supports the point of the presenting party to a greater extent than is offered by the opposition. A reasonable doubt is the margin that exists whereby a reasonable person may doubt the thoroughness of the evidence that is offered for or against a defendant.
The distinctions between these terms can make the difference in a trial for tax fraud or the determination of an auditor to recommend that an audit be transitioned from a civil to criminal tax investigation. If you receive an audit letter, or gain knowledge that the IRS is considering evidence of any type against you, speak with a tax attorney with successful experience in criminal tax defense.
Concerned about potential tax crime allegations? Speak with our legal team
Working with local, national, and international clients facing allegations of tax fraud, or compliance issues, the tax lawyers at Robert J. Fedor, Esq., LLC provide aggressive, skilled legal defense. With offices in Cleveland and Chicago, contact us or call 440-250-9709.
