Tax Law

Presumed Guilty: The Legal Cost of Not Paying Taxes

Notorious gangster, Al Capone, violated several federal laws that could have led to his permanent incarceration. Capone’s ruthless gangs shook down business owners, bootlegged prohibited liquor, and robbed banks to finance violent crimes perpetrated against other gangs and ordinary citizens. However, it was not murder, extortion, and racketeering that landed Capone in legal hot water.

Capone’s downfall was not paying his fair share of federal taxes.

Your Legal Obligation to Pay Taxes

Americans fail to pay federal taxes for a number of reasons, from experiencing personal financial distress to knowingly sheltering business income. Some Americans believe that by not sending the Internal Revenue Service (IRS) money, they come out ahead even though they must pay a tax penalty. Since the United States tax system depends on taxpayers fulfilling their tax obligations, the IRS implements several measures to ensure taxpayers comply with tax laws. Al Capone was never going to fulfill his tax obligations, so it took a small army of federal agents to bring him to justice. The question for you is what’s the legal cost of not paying taxes.

Understanding the Cost of Not Paying Taxes

If you decline to file a federal income tax return or worse, refuse to pay what you owe, you can expect criminal action to be taken against you by the United States government. Often referred to as tax evasion, the law that punishes tax evaders includes hefty fines and/or jail time.  Although tax evasion was used as the cause to arrest Capone for his illegal activities, tax payment enforcement today is used against American citizens that do not have criminal records. Any American citizen who refuses to file a tax return or pay the taxes charged against personal or business income can meet the same fate as Al Capone.

Intent Matters

If you are familiar with murder cases, you know there are three categories of charges that can be leveled against murder suspects. The difference between the three levels of murder charges boils down to premeditation, which in layman terms is called intent. Federal tax law follows the same rule of intent in determining whether an American citizen should be charged with a tax crime. Many tax evaders make mistakes on tax forms that the IRS perceives as accidental and thus, not worthy of criminal charges. If you generate revenue from a criminal operation, you can expect to face federal tax evasion charges. In between the two legal extremes are taxpayers that do not commit crimes, but intentionally deceive the IRS. To convict you of a tax crime, the IRS does not have to prove the amount of taxes you owe. It simply has to prove you failed to comply with federal tax laws.

Guilty Until Proven Innocent

Unlike every other type of law, tax law presumes you are guilty until you can prove your innocence. This quirk in the legal system places accused tax offenders in the untenable position of defending themselves, especially if they do not present physical evidence that proves their innocence. The IRS does not require a warrant to audit taxpayers. Revenue collection agents for the federal government routinely perform audits based on red flags built into its elaborate computer software system. It starts with a primary investigation to determine whether criminal charges should be filed. If the IRS determines there is enough evidence to move forward, the agency them initiates a “subject criminal investigation” order.

The cost of not paying taxes can result in financial damage that lasts a lifetime. If the IRS contacts you to initiate a primary investigation, you need to seek immediate help from a licensed tax law attorney that has a proven record of beating the agency in court. Only consider a licensed tax attorney who offers a free initial consultation to see if you need legal assistance to fight the IRS.

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