From the tax workplace David W. Klasing

If you are concerned that the IRS could charge you with tax evasion or fraud, you need the advice of an experienced tax criminal lawyer. The experienced tax attorneys and auditors at the tax offices of David W. Klasing can break down your situation and calm your mind. For more information on how you could benefit from our services, call us at (800) 681-1295 or make an appointment online.


If you made an honest mistake by not filing taxes properly or in a timely manner, the IRS may consider that your conduct is enough to be civilly punishable but not enough to criminalize. Negligence assumes that the taxpayer has made a reckless mistake. There is no intent for negligence in tax evasion.

Most of the time, if an IRS auditor determines that you have negligently violated the Internal Revenue Code, they will impose a fine that correlates with the nature of the non-compliance. Consideration should be given to the amount unduly underpaid and the circumstances of the negligence. Typically, the penalty is around 20% of the additional tax liability imposed due to the negligent filing.

Civil tax fraud declared

The government may impose stricter penalties on taxpayers who willfully engage in fraudulent behavior to defraud the IRS or avoid paying taxes owed lawfully. In order to demonstrate fraudulent conduct by a taxpayer, the IRS must provide clear and convincing evidence that at least part of the taxpayer's failure to meet its responsibilities is due to his or her fraudulent conduct.

The IRS can impose a penalty of 75% of the underpayment attributed to taxpayer fraud. If the entire tax return is proven to have been fraudulent, the penalty can be 75% of the total additional balance due. The taxpayer through his attorney can potentially claim this up to a penalty of 20% for negligence by showing through preponderant evidence that not all of the underpayment was affected by the fraud. The really appalling reality of the civil fraud penalty is that if the government has the evidence to support a civil fraud penalty, it also has the evidence to be prosecuted. If you are facing a civil fraud penalty, it is best to employ a competent tax criminal defense attorney to mitigate the possibility of tax prosecution.

Criminal tax fraud explained

The Criminal Tax Fraud or Tax Evasion Act contains elements similar to those in the Civil Tax Fraud Acts. There are three main differences between the two. First, the burden of proof for criminal tax fraud is much higher than that for civil tax fraud. Second, criminal tax fraud often results in prison terms. Third, there is an applicable statute of limitations that governs when tax fraud charges can properly be brought.

In order to be able to prove criminal tax fraud in court, the government must prove beyond doubt that the accused has deliberately evaded tax liability. This can take the form of either a fraudulent tax assessment or fraud related to the obligation to pay the properly assessed taxes.

Key differences between criminal and civil tax fraud

Whether the government will bring civil or criminal charges in each case depends on its assessment of the facts and circumstances of the individual case. Below is an explanation of the grounds that split the charges of criminal and civil tax fraud.

Burden of proof of civil and criminal tax fraud

The burden of proof is a legal burden that prosecutors must meet in order to advance their arguments in order to win the case. The burden of proof varies depending on the disputed jurisprudence in the case of the bar association. In the case of civil tax fraud, the government simply has to prove its case with "clear and convincing evidence". In non-legal terms, this means the IRS must convince a jury that the defendant is more likely than not to be guilty of criminal charges brought by the IRS and prosecuted by the Justice Department's Income Tax Division.

In contrast, tax fraud laws require the government to prove its arguments "without reasonable doubt". This is the highest available burden of proof on the prosecutor. This means that in order to convict the accused, the jury cannot have any reasonable doubt as to the guilt of the accused in relation to the criminal charges brought against the accused. This difficult burden is required in criminal tax fraud cases as the resulting penalty often includes a substantial prison sentence and refund.

Statute of limitations for civil and criminal tax fraud

The statute of limitations is the legally prescribed period of time during which the government can initiate specific civil or criminal proceedings against someone. If a case is filed after the relevant statute of limitations has expired, the court will most likely reject the case at least following an extra-statutory criminal complaint.

If you are ever approached by the IRS Criminal Investigation, or undergoing an eggshell or reverse eggshell exam, beware of the concept of "final confirmatory act". If the last affirmative act of a tax offense occurs within the statute of limitations, the offense always becomes statute-barred if the majority of the offense took place before the expiry of the statute of limitations. Lying about an offense that occurred before the statute of limitations expires is considered the last affirmative act of the offense that occurred before the expiration of the statute of limitations. This will effectively bring all of the crime back within the statute of limitations.

There is no applicable statute of limitations for most cases of civil tax fraud. This means that the government has no time limit in its ability to raise civil tax fraud cases. However, most tax fraud laws have a statute of limitations of five or six years, depending on the type of crime charged. In other words, the government has five or six years from the time the non-compliance is found to bring its case forward. If an otherwise criminal tax evasion case has occurred outside of the statute of limitations, the government will often seek civil tax fraud proceedings instead. In addition, the limitation period, as soon as tax fraud has been established, is open until the beginning of the period in order to assert previous tax evasions under civil law even if they occurred in a "closed" tax year.

Do you have any questions about the levels of tax evasion? Call us for answers

The tax offices of David W. Klasing have the necessary experience to explain the intricacies of civil and criminal tax law and to successfully mitigate the enforcement measures of the federal and state tax authorities while preserving your freedom and your assets. To arrange an initial consultation at a reduced price, call our offices at (800) 681-1295 or make an appointment online here.

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Public contact: Dave Klasing Esq. MS Tax CPA, (Email protected)

SOURCE Tax Firms of David W. Klasing, PC

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