New York State Tax Fraud Investigations
When people talk about tax fraud, they usually think of the IRS investigations and IRS criminal prosecutions. It is of course, true. The IRS is certainly very active in investigating and prosecuting tax fraud cases on federal level. However, it’s actually not the IRS that’s responsible for prosecuting most tax crimes; In New York, it’s the Department of Taxation and Finance. New York State has a huge budget gap and is extremely money-hungry. If you have a potentially criminal tax issue, it’s much more likely to become a real criminal issue on the state level than on the federal level. New York State’s Taxation and Finance is by far the most aggressive tax enforcing agency in New York.
What is tax fraud in New York State?
Tax fraud is a generic name for a variety of tax evasion criminal offenses. The most commonly prosecuted type of tax fraud in New York is willful failure to file a tax return.
We’ve represented a number of individuals who haven’t filed taxes for years for various reasons, and this is something the government goes after aggressively.
Another common type of tax fraud crimes prosecuted in New York is filing a false tax return. This means that if you willfully make a false statement or supply false information of any kind on your tax return, you commit a crime.
These two are the frontrunners but other common tax fraud crimes include: failure to Remit Taxes Collected on Behalf of the State and Failure to Collect and pay a Sales Tax. Sales tax issues are extremely common and are often prosecuted in New York.
Some people violate tax laws intentionally and some simply can’t figure out the complicated tax rules and regulations. In any prosecution for tax fraud the government must prove that you acted willfully, meaning with intention to violate the law. Many cases hinge on highly technical aspects of tax law and their interpretation. This is why we always work with top-notch CPA forensic specialists while defending tax fraud and evasion cases.
So, if you are the target of a criminal tax investigation, what can you do? In most cases, the government doesn’t just come in and arrest you. You will be notified of an investigation. This is when you must be proactive.
What Should You Do If You Are Under Criminal Tax Investigation in New York?
Tax fraud investigations don’t always begin as criminal investigations. Many times the agency starts to look into a particular case from the administrative or civil standpoint. It could be a routine audit or something different from the previous years or even something that is different from the rest of similarly situated people or business that gives rise to the inquiry. This process can take time before the investigative agents decide that there is enough evidence to suggest that fraud was committed. Then the case will be referred for criminal prosecution by the Department of Taxation and finance or the local district attorney’s office.
As soon as you believe that you may be facing a criminal tax investigation you should contact an experienced tax fraud attorney such as our firm. It is crucial that you don’t discuss the case with the investigators, leave it to professionals. Remember that anything you volunteer to the investigators will be used against you even if you believe the information is innocent. Don’t let the agents conduct any searches of your premises or home unless they have a search warrant. Ask for their business card and tell them that you want to speak with a lawyer.
EXAMPLE OF PAST CLIENT’S CASES
Our client was the owner of a large restaurant. He was investigated for sales tax fraud. The restaurant collected sales tax and was required to report it, and then pay all of these funds to the State. But the client underreported his taxes earned. Originally, the government said our client owed over $150,000. Before the case was referred to the DA’s office for prosecution, we retained a forensic accountant who worked with the government’s auditors to verify the numbers. As the result, the tax liability was significantly reduced. We then worked out a deal with the Department of Taxation and Finance to resolve the case administratively. The client was allowed to pay off the debt plus interest and penalties with a structured payment schedule. He was never prosecuted.
If you discover that you are the target of the New York State Department of Taxation and Finance investigation, you may be in risk of criminal prosecution. You must talk to a competent New York tax fraud lawyer before discussion anything at all regarding the case with anyone else, let alone the investigators.
Our first goal is to shut down any investigation in the beginning and minimize your criminal exposure. If you want to discuss your case with a professional tax fraud defense attorney, pick up a phone and call (212) 577-6677. We will answer your questions and show you how your problems can be resolved.