What are the most common reasons for an IRS tax audit?

The IRS typically audits returns that show unusually high deductions, complex transactions such as those involving foreign accounts or entities, and discrepancies between reported income and third-party information reports.

Can I negotiate with the IRS to reduce my tax debt?

Yes, through an Offer in Compromise program, you may be able to settle your tax debts for less than the full amount if certain criteria are met, such as proving payment in full would cause financial hardship.

What is the statute of limitations on IRS collections?

The IRS generally has ten years from the assessment date to collect taxes owed. However, this period can be extended if you file for bankruptcy or request an installment agreement and other circumstances that suspend the collection statute.

IRS Tax Defense

Failure to File: Understanding the Criminal Defenses Available

When facing a criminal charge for failure to file tax returns, it's crucial to recognize that such actions can be prosecuted under several statutes including 26 USC 7201 (tax evasion) and 26 USC 7206 (false or fraudulent statements). Prosecutors in the IRS-CI often seek convictions by establishing a pattern of non-compliance through missed filing deadlines, which can escalate to criminal charges when significant tax debts are involved. The failure to file can also be seen as an attempt to evade taxes under section 7201, where intent becomes the critical element for prosecution. In my experience as a federal prosecutor, I've encountered cases where individuals faced severe penalties simply due to unintentional or technical violations that spiraled into more serious criminal issues. A key aspect of defending against these charges involves challenging the government's ability to prove both the act and the intent required under relevant statutes. For instance, under 26 USC 7201, prosecutors must show beyond a reasonable doubt not only that you failed to file but also that you intended to evade taxes through such failure. This intent requirement provides significant ground for defendants to contest their charges by demonstrating lack of knowledge or misunderstanding about filing requirements. Another potential defense strategy lies in arguing the statute of limitations; while the government has six years to pursue civil penalties, criminal actions are typically subject to a shorter timeframe. Understanding these nuances is crucial when crafting your legal defense. Beyond direct defenses against failure to file charges, it's important to consider broader implications such as whether actions taken were part of an ongoing pattern that could indicate obstruction or structuring under 26 USC 7212 and 31 USC 5322. These statutes cover a range of activities intended to impede the IRS from collecting information necessary for tax enforcement, including attempting to evade tax payments through complex financial transactions designed to circumvent reporting requirements.

Intent and Knowledge

The core of tax evasion cases under 26 USC 7201 lies in proving the defendant's intent to evade taxes, which is often challenging for prosecutors.

Statute of Limitations

Taking advantage of the statute of limitations can be a powerful defense, as it limits how long the government has to pursue charges.

Structuring and Obstruction

Actions that might be perceived as obstruction or structuring can extend the scope of criminal charges beyond simple failure to file.

Former Federal Prosecutor Insight

In handling failure to file cases, prosecutors often look for patterns that suggest a deliberate attempt to evade taxes or obstruct investigations. Defending these charges requires detailed analysis of financial records and thorough understanding of tax laws to highlight any unintentional mistakes or misunderstandings.