Civil and Criminal Tax Fraud in NYC

In today’s current economy, many people look for ways to make ends meet with less money than they had before. However, going outside the law to do so should not be considered. Tax fraud is one of the most common white collar crimes in the country, and due to its powerhouse investment sector, it is an endemic problem in New York, even reaching the state’s legislators. Many people, however, still remain uncertain about what constitutes tax fraud and what is within the realm of acceptable estimating.

The Letter of the Law

Tax fraud can be civil or criminal, with the main difference between the two being the burden of proof required: civil fraud requires proof only by “clear and convincing evidence,” while criminal tax fraud, like all other criminal acts, must be proven “beyond a reasonable doubt.” Whether civil or criminal, however, it is important to understand that there are a multitude of acts that constitute tax fraud in New York State. N.Y. Tax Law § 1801 lays them out clearly.

If one examines the law, an important factor becomes immediately apparent: an affirmative act must happen in order for tax fraud to occur. Either you must act, or you must cause another to act; mere support of an intangible nature is not enough to constitute fraud. That said, the difficult part is that failing to perform a step in the tax process can constitute an ‘act’ for the purpose of determining whether or not fraud has been committed. If someone willfully fails to submit a piece of their tax return, thus making it impossible for the return to be correctly filed, that is still an event which has occurred in furtherance of not providing the right amount of tax money to the state.

The methods of perpetrating fraud laid out in the statute also cover both filing and receiving a refund of the wrong size. While many states confine themselves to examining the filing process, New York will investigate refund size to see if anything appears to be patently irregular. If your refund is grossly out of proportion to what you might expect to receive, the authorities will likely intervene.

Misconceptions About Criminal Tax Fraud

If you have been found to have paid an improper amount of taxes in recent years, you may be under the impression that simply offering to pay the appropriate amount can solve the problem. This is not so in New York, however. In this state, criminal tax fraud is actually held to be theft of a sort – the state has been deprived of its rightful tax levy due to the criminal actions of the taxpayer – and is prosecuted aggressively. The degree of tax fraud will likely depend on the monetary value of the alleged tax theft, but even for criminal tax fraud in the fifth degree (the least severe instance) the punishment can be up to a year in jail. A conviction of criminal tax fraud in the first degree can net a sentence of up to 25 years.

Also, in New York, it is possible to aggregate smaller instances of tax fraud that are pursuant to a common scheme – that is, stemming from the same intent and perpetrated roughly in the same manner. Since degree very often depends on the monetary value of the tax theft, as has been stated, it is very plausible that five counts of fifth-degree tax fraud can turn into one large count of tax fraud in the first degree. Especially if you have a prior criminal record, that can be an extremely daunting prospect.

Contact A Legal Professional

If you face potential fines or jail time due to tax fraud, it is best to speak with an attorney. The experienced tax attorneys at the Law Offices of Stephen B. Kass, P.C. have years of experience in this field, and we work hard to get our clients dealt with appropriately. Contact our New York City offices today for a free initial consultation. We will do our best to help you.