How to Handle an IRS Audit: What You Should Know Before Responding

This is a subtitle for your new post

Tax Controversies in New York: Protecting Your Rights Against the IRS and State Authorities

What to Expect When Your Case Goes to Federal Tax Court in New York

What New York Entrepreneurs Need to Know About Business Formation

Estate and Trust Planning Solutions for Families and Business Owners in New York

Discover how to form an LLC in New York with ease. Follow our detailed guide on naming your LLC, filing paperwork, publishing notices, and meeting state requirements. Auerbach Law Group, P.C. provides experienced legal support to streamline the process.

Filing a false tax return is a serious offense that can lead to severe penalties, including fines and imprisonment. However, individuals accused of this crime may have legal defenses that can help challenge the charges. Understanding these defenses is essential for anyone facing allegations of tax fraud. Lack of intent to deceive One of the strongest defenses in a false tax return case is proving a lack of intent. The prosecution must show that the taxpayer willfully misrepresented information. Honest mistakes, such as miscalculations or misunderstandings of tax laws, do not meet the legal standard for fraud. If errors were made without intent to deceive, this defense may apply. Reliance on a tax professional Many taxpayers seek assistance from accountants or tax preparers. If an error occurred due to a professional’s mistake, this could serve as a defense. Demonstrating reliance on a tax expert , especially if the taxpayer provided accurate information, may help argue against willful wrongdoing. Insufficient evidence The burden of proof lies with the government. Prosecutors must present clear and convincing evidence that a taxpayer knowingly submitted false information. If the evidence is weak, inconsistent, or based on assumptions rather than facts, the defense can challenge the case’s credibility. Statute of limitations Tax fraud cases have a limited time frame for prosecution. Generally, the Internal Revenue Service (IRS) has six years to bring charges for criminal tax violations. If authorities pursue a case after this period, the defense can argue that the charges should be dismissed. Correcting the mistake If a taxpayer voluntarily corrects errors before the IRS begins an investigation, it may demonstrate good faith. Filing an amended return or paying the owed amount can help reduce penalties and weaken the prosecution’s case. Allegations of filing a false tax return require a strong legal strategy. Understanding the available defenses and acting quickly can help those accused of tax fraud challenge the charges effectively.

The IRS issues trust fund recovery penalties (TFRPs) to hold individuals personally responsible for unpaid payroll taxes. Employers must withhold income and payroll taxes from employees’ wages and remit them to the IRS. If a business fails to do so, the IRS can assess TFRPs against responsible individuals, including business owners, officers, or employees who manage financial decisions. Determining responsibility and willfulness To impose a TFRP, the IRS must establish that the individual was responsible for collecting, accounting for, or paying employment taxes. The IRS also needs to prove that the responsible person acted willfully in failing to remit the taxes. Willfulness does not require fraudulent intent; a voluntary, conscious decision to pay other obligations before tax liabilities is enough to meet this standard. Requesting an appeal Taxpayers can challenge a TFRP assessment through an IRS appeal. After receiving a proposed assessment, the taxpayer can submit a written protest within 60 days (75 days for cases outside the U.S.). The protest should provide evidence and arguments explaining why the assessment is incorrect. This process allows taxpayers to present their case before an independent IRS appeals officer. Contesting liability in tax court If an appeal does not resolve the issue, taxpayers can challenge the assessment in the U.S. Tax Court, the Court of Federal Claims, or a U.S. District Court. To proceed in district court or the Court of Federal Claims, the taxpayer must first pay a portion of the penalty and file a refund claim with the IRS. If the IRS denies the claim or does not respond within six months, the taxpayer can file a lawsuit. Providing evidence to support the case Strong documentation is essential for disputing TFRPs. Evidence such as emails, financial records, and witness testimony can demonstrate that the individual lacked responsibility or did not act willfully. Legal counsel can help present a well-supported case to the IRS or the courts. Taxpayers facing TFRP assessments should seek guidance from professionals who are knowledgeable in tax matters. These individuals can analyze the case, gather evidence, and navigate the appeals process. Proper preparation and a strong defense increase the chances of a favorable outcome and minimize financial liability.