International Tax Crime Violations

International Tax Crime Violations

International Tax Evasion, Fraud & Failure to File a Return Crimes

International Tax Crime Violations: With the globalization of the US economy, the amount of international tax crime has increased significantly over the past five (5) to ten years. The US Government has directed more resources to ensure compliance with US tax law, including foreign accounts compliance and even the criminalization of FATCA (Foreign Account Tax Compliance Act). When it comes to International money and taxes, common tax crimes include: Tax Evasion, Tax fraud and Filing False Statements — or not filing a tax return at all. Since the Internal Revenue Service coordinates more than 110 different countries across the globe, it is important for US Taxpayers to be aware of the risks and carefully assess whether or not their behavior may qualify them as criminally willful sufficient to be charged with the tax crime. Let’s review some of the more basic international tax crimes:

Tax Evasion (26 USC 7201)

Tax Evasion is the most serious of all three international tax crimes listed — and the crime that has the most potential consequences. While Taxpayers throw the term “tax evasion” around often, the actual crime of tax evasion is hard to prove. That is because in order to prove a willful attempt to evade or defeat tax, it requires an affirmative act. One common example that is used to show what is usually not considered an affirmative act, is failing to file a tax return. Since there was no act (e.g., no filing) — it generally does not qualify as an affirmative act. Tax Evasion is a Felony, and government must prove the crime with the “beyond a reasonable doubt” standard to convict for this (or any crime) — the average time for incarceration is 3-5 years.

Failure to File a Return (26 USC 7203)

When a person fails to file a tax return, provide information and/or pay tax — they may be subject to a 26 USC 7203 international tax crime. When it comes to a violation of this code section, oftentimes it is because a tax return was not filed. Merely failing to file a tax return is not necessarily considered a criminal tax violation — unless the Government can prove willfulness. Even when the Taxpayer is considered willful — the punishment is generally not as bad as tax evasion. When a person is sentenced for violating section 7203 — it is limited not more than one year, and when it is a first offense, they can usually avoid incarceration. It should be noted, the violation and involves 6050I (Trade or Business) — it jumps up to a felony.

False Tax Returns & Statements (26 USC 7206)

One of the most comprehensive criminal domestic and international tax crimes statutes involves tax fraud. Commonly referred to as “Tax Fraud” these types of violations can be either civil or criminal. In a common tax fraud criminal situation, the Taxpayer willfully makes a false statement under penalty of perjury — and at the time of making false statement, the taxpayer does not believe the statement that they have verified under penalty of perjury is true. It also includes aiding or assisting as well. While civil tax fraud has an unlimited statute of limitations, the same rules do not apply to criminal tax fraud. A violation of this criminal tax statute will generally result in imprisonment for 18-30 months.

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