As a taxpayer in North Carolina, it is essential to understand the difference between tax fraud and tax evasion and the consequences associated with each.
While both terms are often used interchangeably, there are distinct differences between the two, and understanding these differences can be critical for those under investigation for tax-related matters.
How so? While both are considered crimes, there are differences in what you are charged with, the consequences you face, and what prosecutors must prove to convict you.
Defining Tax Fraud and Tax Evasion in North Carolina
Tax fraud involves intentionally submitting false information on a tax return, such as claiming false deductions or credits, failing to report all income, or using false Social Security numbers. It is a criminal offense punishable by fines, imprisonment, and other penalties.
How serious of a criminal offense? In our state, tax fraud is a Class H Felony, with a maximum prison sentence of 25 years.
On the other hand, tax evasion is failing to pay the total amount of taxes owed, either by not reporting all taxable income or hiding assets or income. Tax evasion is also a criminal offense punishable by fines, imprisonment, and other penalties.
In North Carolina, tax evasion is a Class I Felony, with a maximum prison sentence of 15 years.
Key Differences between North Carolina Tax Evasion and Tax Fraud
One key difference between tax fraud and tax evasion lies in the intent behind the act. While tax fraud requires a deliberate act of dishonesty, tax evasion can be done out of neglect – or simply forgetting to report certain information.
This distinction can significantly impact the outcome of a criminal case and the severity of the penalties imposed.
Another difference between tax fraud and tax evasion? The type of evidence required for conviction.
Tax fraud cases require the government to prove that the taxpayer knowingly and intentionally submitted false information on a tax return. This means the prosecution must show a clear pattern of fraud, such as submitting multiple false tax returns over time.
In cases of tax evasion, the government has to prove that the taxpayer had the ability to pay the full amount of taxes owed but deliberately chose not to do so. This can often be difficult for the prosecution to prove and may require the assistance of expert witnesses, financial records, and other evidence.
Where NC Criminal Tax Matters Are Concerned, the Entities against You Are Powerful
It is important to note that the IRS and the North Carolina Department of Revenue have extensive resources at their disposal for investigating tax fraud and tax evasion. These agencies have the authority to access bank records, employment records, and other financial information. They often use this information to build cases against taxpayers suspected of committing tax-related crimes.
If you are facing tax fraud or tax evasion charges, it is crucial to seek the advice of an experienced NC criminal defense attorney as soon as possible. A skilled lawyer can help you understand the charges against you, the government’s evidence against you, and your rights and options under the law.
In some cases, it may be possible to negotiate a plea bargain or reach a settlement with the government to reduce the charges against you or the penalties you may face. In other cases, it may be necessary to go to trial to defend yourself against the charges.
Regardless of the specific circumstances of your case, it is critical to have a knowledgeable criminal defense attorney on your side. He or she can help protect your rights and gives you the best chance at securing the most favorable outcome.
