New York Tax Fraud Defense Attorney

Facing tax fraud charges in New York can be a difficult experience as the consequences may include fines, repayment of the owed taxes with interest, penalties, and possible imprisonment. 

At The Law Offices of Mehdi Essmidi P.L.L.C., we know that tax fraud carries severe penalties under federal and state laws. The charges are complex, and the legal process is intricate, but remember that a charge is not a conviction.

Our lead attorney, Mehdi Essmidi, has experience with tax fraud and associated crimes. He’s a former prosecutor and uses his knowledge to fight for the best possible outcome for each case. Contact us today for a free consultation.

Understanding Tax Fraud Charges

Tax fraud is a white-collar crime that involves making false statements on a tax return to avoid paying due taxes. Both federal and state laws have strict penalties. District attorneys investigate tax evasion allegations relentlessly because they know that filing false tax returns is a major contributor to tax evasion and fraud. 

Tax fraud is often a general term used to describe various offenses under the United States Code, specifically Title 18 and Title 26, and under New York State Law, particularly Tax Law 1801. We cover each one separately below. 

Tax Fraud Under Title 18

Tax crimes can be charged under Title 18 for crimes such as the willful failure to collect or pay tax, evasion of tax payment, and the submission of fraudulent tax returns or business records.

When an individual or company deliberately falsifies information with the intent to limit their tax liability, whether by underreporting income, inflating deductions, or hiding funds in offshore accounts, they are potentially committing tax fraud under Title 18. Here are the most relevant sections: 

286 Conspiracy to defraud the government with respect to claims: This section makes it illegal to conspire or attempt to defraud the United States or any agency, including efforts to defraud the IRS through false claims for refund or other fraudulent tax schemes.

287 False, fictitious, or fraudulent claims: It criminalizes making false, fraudulent, or fictitious claims against the United States, including filing false tax returns or claims for tax refunds.

371 Conspiracy to commit offense or to defraud the United States: This broadly applies to conspiracies to commit any offense against the United States or to attempt to defraud the United States in any manner, including tax evasion and fraud.

1001 Statements or entries generally: This section makes it illegal to knowingly and willfully make false statements in any matter in the jurisdiction of the United States government’s legislative, executive, or judicial branches.

Tax Fraud Under Title 26

Tax fraud can be prosecuted under Title 26, also known as the Internal Revenue Code (IRC). This complex body of laws specifically covers violations of federal tax laws, which govern the administration of federal tax obligations, tax returns, and proper income reporting.  

When an individual or business is suspected of violating Title 26, the matter can escalate, and the accused may face an extensive investigation, which, in New York, is commonly run by the Department of Taxation and Finance.

7201 Evasion of tax: It makes any willful attempt to evade or defeat taxes imposed by the Code a felony.

7203 Willful failure to file return, supply information, or pay tax: This section deals with the failure to file tax returns and the failure to pay taxes.

7206 Fraud and false statements: This includes making false statements on a tax return or other documents.

7207 Fraudulent returns, statements, or other documents: This involves submitting any fraudulent document related to a tax matter.

New York Tax Law § 1801-1806

New York Tax Law 1801–1806 outlines tax fraud offenses within New York. Under this law, tax fraud can range from a misdemeanor for minor infractions to a Class B felony for evasion involving large sums of money, with provisions covering criminal and civil penalties.

Examples of Tax Evasion

Tax evasion is one of the most common forms of tax fraud. Examples include:

• Reporting less income than earned to reduce tax liability. 
• Overstating deductions or credits claiming false or inflated deductions to decrease taxable income.
• Businesses using two sets of financial books — one for tax purposes and another showing the company’s actual profits and losses.
• Making false entries in records to conceal income or increase deductions
• Claiming personal expenses as business expenses

The Process of a Criminal Tax Investigation in New York

The IRS does not run most alleged tax fraud investigations in New York. The Department of Taxation and Finance is responsible for running criminal tax investigations in the state. These investigations can be triggered by discrepancies found during tax audits.

If the evidence supports criminal prosecution, a special agent report detailing the alleged legal violations and recommending prosecution is compiled.

A criminal investigation may be initiated if irregularities during the audit suggest fraud. Investigators may interview you, your employees, and family members and subpoena additional documents.

Potential Penalties for a Tax Fraud Conviction in NY

The penalties for a tax fraud conviction in New York vary depending on the degree of the offense:

• Tax Fraud in its Fourth Degree is a class E felony. Convictions can result in up to four years in prison.
• Tax Fraud in the Third Degree is a class D felony. Convictions can result in up to seven years in prison.
• Tax Fraud in its Second Degree is a class C felony. Convictions include up to 15 years in prison.
• Tax Fraud in the First Degree is a class B felony. Convictions may result in up to 25 years in prison.

Tax Fraud-Related Charges

Tax fraud-related charges encompass offenses related to the deliberate evasion of taxes. Here are some common types of tax fraud-related charges:

Grand Larceny

Grand larceny involves the theft of property valued at $1,000 or more. If the property stolen is a tax return or any other tax-related document, a person could be charged with grand larceny and tax fraud. 

The penalties for grand larceny depend on the value of the stolen property. They can range from a class E felony for property valued between $1,000 and $3,000 to a class B felony for more than $1 million.

Illegal Possession of Stolen Property and Tax Fraud

Illegal possession of stolen property is a crime that can sometimes be related to tax fraud. For instance, if someone possesses tax-related documents or funds obtained through fraud, they may be charged with illegally possessing stolen property in addition to tax fraud.

This connection is particularly relevant when stolen property includes falsified tax returns or embezzled funds meant for tax payments. 

The penalties for illegal possession of stolen property, much like those for tax fraud, are contingent on the property’s value and can range from a class A misdemeanor for property valued at $1,000 or less to a class B felony for property valued at more than $1 million.

False Instrument for Filing

A false instrument for filing is a charge that is frequently associated with tax fraud cases. This charge is brought when someone is accused of submitting a false document to a public office or public servant. In the context of tax fraud, this could involve submitting falsified tax returns or other fraudulent financial documents intending to evade tax obligations.

When tax documents are altered or fabricated to misrepresent financial information, they become false instruments filled with tax authorities. The penalties for false instruments for filing depend on the degree of the offense, ranging from a class A misdemeanor for a second-degree offense to a class E felony for a first-degree offense.

Common Tax Fraud Defenses

When facing tax fraud charges, it’s crucial to have an experienced criminal lawyer who can help you navigate New York Penal Law and other white-collar crimes. There are several strategies we may employ to defend our clients against tax fraud allegations:

Lack of intent: It may be possible to prove that the defendant did not intend to commit fraud, a necessary element of a tax fraud charge.

Insufficient evidence: It may be possible to challenge the prosecution’s evidence, arguing that it lacks sufficient strength to prove beyond a reasonable doubt that the defendant committed tax fraud.

Statute of limitations: If the alleged crime occurred outside the statute of limitations, it might be possible to have the charges dismissed.

Contact Us for a Free Consultation

Being charged with tax fraud often escalates to alleged theft, larceny, and other white-collar crimes. However, our experienced fraud attorneys have the skills to create an aggressive defense while ensuring you make informed decisions moving forward. 

Attorney Mehdi Essmidi, a former New York City prosecutor, defends his clients using his unique insight into criminal law and the prosecution’s strategies. Contact us today for a free consultation.