With tax season behind us, many New Yorkers are no longer worried about this process until next spring. However, for some individuals, this may be the beginning of a legal matter that involves tax fraud. While criminal tax penalties are serious and the more talked about tax crime, civil tax fraud penalties could also plague an individual.
A civil tax fraud matter could occur in one of two ways. First, one could face these penalties based on the facts and circumstances of a civil examination. The second way is as a result of a criminal investigation. When there is clear and convincing evidence that a person committed tax fraud by underpaying his or her tax obligations, civil tax fraud penalties can be asserted.
The evidence in these matters must show that it was the intent of the taxpayer to evade tax assessment that the taxpayer believed to owe. Intent is not inadvertence, the reliance on advice that was incorrect, negligence or carelessness. In matters where there is a joint return, intent must be established for each spouse. This means that a finding of fraud for one spouse cannot be used to impute fraud by the other spouse.
Facing civil penalties for tax fraud can be a difficult situation. Those facing such allegations should understand what rights they have. Because the penalties could mean hefty fines, it is important for one to consider what options one has to resolve this matter, helping them obtain a favorable outcome. Whether it is through litigation or negotiation, it is important that those accused of tax fraud protect their rights.