This article provides some general background to IRC Section 7201 criminal tax evasion charges and describes Section 7201 principal criminal penalties. As you will see, the penalties are severe, and you should immediately seek the advice of a tax attorney if you have any doubts as to whether you are complying with the law and IRS rules.
Legal Test under IRC Section 7201
IRC Section 7201 deals with criminal tax evasion charges. In Sansone v. United States, 380 U.S. 343, 354 (1965), the United States Supreme Court stated that two different charges can be brought pursuant to Section 7201: (1) the offense of willfully attempting to evade or defeat the assessment of a tax, and (2) the offense of willfully attempting to evade or defeat the payment of a tax.
The legal test that the government must satisfy consists of three elements:(1) that a tax deficiency existed, (2) an affirmative act of tax evasion, or an attempt to evade taxes, and (3), willfulness. The government is required to prove each of three elements beyond a reasonable doubt – the standard of proof in criminal cases – in order to show a violation of this section. By contrast, in a typical civil case, the standard of proof is only a preponderance of the evidence.
In general, the courts have held that filing a false return may demonstrate an attempt to evade the assessment of a tax, but it is not necessary for an individual to have filed a false return in order to show an attempt of tax evasion. Certain courts have also held that it is not required for the government to prove the exact amount of tax due in order to show tax evasion.
Each of the elements necessary to prove a violation may involve complex factual matters and/or legal arguments, so you may be well advised to seek an experienced tax attorney if you find yourself in such a case.
Penalties under IRC Section 7201
Under IRC Section 7201, “Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.”
Thus, the criminal penalties under Section 7201 may consist of two parts. First and foremost, imprisonment of up to five years (this charge may have its complications when combined wiht other penalties – therefore, the particular facts of your case will determine whether you potentially face more than five years in prison). Second, the monetary penalty of up to $100,000 if the defendant is an individual or up to $500,000 if the defendant is a corporation. The statute allows for the combination of both types of penalties in a single case.
Contact Sherayzen Law Office for Legal Help in Dealing with Section 7201 Charges
If you are or may potentially be in a situations where the U.S. government may charge you with criminal tax evasion offenses, contact Sherayzen Law Office for legal help. Our experienced tax firm will analyze your case, help you determine whether you may potentially face criminal charges (if you not yet charged), determine the probability of a successful criminal prosecution by the U.S. government, build a creative ethical defense (while considering other possibilities to turn this into a civil case), and rigorously represent your interests in court and during negotiations with the U.S. Department of Justice or IRS.