Tax fraud is defined as the deliberate or intentional act of providing misinformation (or the omission of relevant data) on a tax return to limit one’s tax obligation. The term “willfully” as used by the applicable New York Consolidated Laws (TAX Fraud Act § 1801 (a)) is as follows: ” acting with either intent to defraud, intent to evade the payment of taxes or intent to avoid a requirement of this chapter, a lawful requirement of the commissioner or a known legal duty.”
The act of tax fraud can be committed by an individual or an established business entity. The objective of those who commit a “tax fraud act” is to avoid paying the tax due on the actual or accurate accounting figure.
A tax fraud act may take on many forms and include the following, among others:
- Using a false Social Security Number while filing a tax return.
- Not reporting or under-reporting income on a tax return.
- Failing to pay taxes.
- Scheming to cheat the state.
- Misrepresentations.
- Claiming false or inappropriate deductions.
- Claiming business expenses, when in truth, they were personal or non-business related.
Tax evasion, an example of tax fraud, is the act of illegally avoiding tax liabilities and obligations.
If you (or a family member or friend) are facing the prospect of a tax audit or visit from a tax enforcement agent with a New York State or federal government agency, it can be overwhelming and even emotionally paralyzing for some. If an agency or prosecutorial arm of the government contacts you, you must take the necessary steps to protect yourself by consulting with a tax fraud attorney because the consequences include potential financial penalties and a genuine possibility of lengthy incarceration.
It is essential to avoid further aggravating an already precarious legal circumstance by voluntarily providing records or willingly admitting to anything without the guidance of a qualified tax fraud attorney. This information can be used (and is often pertinent) for a future arrest, an indictment, or even in a courtroom trial – if you have been charged with violating NYS Tax Law Article 1800.
The Eight Categories of New York Tax Fraud
The Empire State sets forth eight tax fraud categories. Each of them provides various punishment degrees for alleged offenses – from misdemeanors to severe felonies and even jail time. Note, however, that there is considerable overlapping within these defined New York tax fraud categories, which means more than one statute may apply to your situation.
- Tax Law §§ 1801 (a)(1) – Willful failure to file a return or any other mandated paperwork.
- Tax Law §§ 1801 (a) (2-3) – Willfully/knowingly filing a fake return or other false information.
- Tax Law §§ 1801 (a)(4) – With regard to any matter under the law, willfully scheming to defraud New York State.
- Tax Law §§ 1801 (a)(5) – Willfully failing the remission of taxes due to the state.
- Tax Law §§ 1801 (a)(6) – Willfully failing to collect required taxes – i.e., withholding, sales or excise, etc.
- Tax Law §§ 1801 (a)(7) – Intentionally and willfully evading taxes.
- Tax Law §§ 1801 (a)(8) – The use of a falsified exemption certificate.
Understanding When Conduct Becomes Criminal Tax Fraud in New York State
Like most state penal codes, in New York, there are varying degrees of consequences – from probation to serious incarceration. For the provisions stated above to meet the threshold of tax fraud act as a felony, these conditions must be met:
- The New York taxpayer must intend to commit the illegal act – in other words, they are willful.
- The New York taxpayer must have an intent to defraud the state of New York.
- The New York amount of the tax liability must meet its own established monetary thresholds.
These provisions of New York law detail the various degrees of tax fraud in the state:
- Criminal Tax Fraud in the First Degree -– New York Tax Law 1806.
- Criminal Tax Fraud in the Second Degree – – New York Tax Law 1805.
- Criminal Tax Fraud in the Third Degree- – New York Tax Law 1804.
- Criminal Tax Fraud in the Fourth Degree – – New York Tax Law 1803.
- Criminal Tax Fraud in the Fifth Degree – New York Tax Law 1802.
It is not uncommon to see that multiple offenses defined as a tax fraud act combine to form one arrest or indictment. However, only one act of tax fraud is enough for a criminal charge basis.
Criminal Tax Fraud & Associated Crimes
Prosecutors have a variety of crimes they can pursue against someone accused of theft of State funds. Various legal agencies prefer prosecuting offenders with related white-collar crimes that may have been committed in the tax fraud act. These primarily include the falsification of documents:
- Offering a False Instrument for Filing.
- Falsifying Business Records.
- Forgery.
The reality is that despite the degree of criminal tax fraud that has been alleged, it often includes other related crimes, including:
- Grand Larceny – New York Penal Law – Article 155.
- Criminal Possession of Stolen Property – New York Penal Law Article 165.
- Forgery: New York Penal Law Article 170.
- Falsifying Business Records – New York Penal Law Article 175.
- Filing a False Instrument – New York Penal Law Article 175.
- Federal Tax Fraud and Tax Evasion.
New York tax authorities, primarily located in the capital region of Albany, are equipped with varying legal weapons in their combat against tax fraud. The New York Department of Taxation is essentially the state-level IRS. The state legislature has set forth serious criminal sanctions for those convicted of tax fraud.
The Take-Away
Whatever the situation or degree of tax fraud, the reality is that this offense (and those that are often related) can result in a prison sentence, a derailed career, and an uncertain future. Be proactive in helping yourself. Speak with an experienced tax fraud attorney in New York who can help identify and implement appropriate motions in your defense.
