What Are the Consequences of Making False Statements to the IRS Before (or During) a Criminal Tax Audit?

While several allegations can lead to criminal charges against individual and corporate taxpayers, some of the most common allegations involve making false statements to the Internal Revenue Service (IRS). Although inadvertently filing a false tax return is not a federal crime, willfully filing a false return is. As Washington D.C. criminal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains, willfully making false statements to the IRS can have serious consequences—and this is true regardless of whether these statements are made before or during a criminal tax audit.

Multiple Federal Laws Prohibit Willfully Making False Statements to the IRS

Multiple federal laws prohibit willfully making false statements to the IRS. While the Internal Revenue Code (IRC) includes criminal enforcement provisions for taxpayers who willfully file false returns, taxpayers can also face prosecution under other non-tax-specific criminal statutes. For example, while 26 U.S.C. Section 7206 (which is part of the IRC) imposes criminal penalties for willfully filing a return that a taxpayer “does not believe to be true and correct as to every material matter,” 18 U.S.C. Section 1001 (which is not part of the IRC) imposes criminal penalties for making false statements to federal agents (including revenue agents and criminal investigators at the IRS).

The maximum penalties under these federal statutes include:

• 26 U.S.C. Section 7206: Up to a $100,000 criminal fine ($500,000 for corporations) and three years of federal imprisonment, together with the costs of prosecution.
• 18 U.S.C. Section 1001: Up to a $250,000 criminal fine ($500,000 for corporations) and five years of federal imprisonment, together with the costs of prosecution.

While these are two examples of potential charges resulting from IRS criminal tax audits, individual and corporate taxpayers can face a variety of other criminal charges as well. Multiple provisions of the IRC provide for criminal enforcement in appropriate cases, and the federal attempt, conspiracy, wire fraud and money laundering statutes (among others) will come into play in many cases as well. When charged with multiple crimes, taxpayers can easily face millions of dollars in aggregate fines and decades of federal prison time.

Defending Against an IRS Criminal Tax Audit

With these risks in mind, taxpayers who are facing IRS criminal tax audits need to take an informed, strategic and proactive approach to their defense. This starts with engaging an experienced Washington D.C. criminal tax lawyer to advise them and communicate with the IRS on their behalf. While it is possible to resolve IRS audits without criminal charges in many cases, doing so requires a clear understanding of the law, the IRS’ enforcement tactics and priorities, and the defense strategies that are available.

Contact Washington D.C. Criminal Tax Lawyer Kevin E. Thorn

If you need to know about the risks involved in facing an IRS criminal tax audit and how taxpayers can (and should) mitigate these risks during the audit process, we encourage you to contact us promptly. To request an appointment with Washington D.C. criminal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, call us at 202-349-4033 or contact us confidentially online today.