Tax fraud is a serious offense that can result in criminal charges and severe penalties, including fines and even prison time. In New York, the consequences of committing tax fraud can be particularly severe, as the state has some of the strictest tax laws in the country. Criminal tax fraud In New York occurs when an individual or business intentionally evades paying their taxes, often through falsifying or omitting information on tax returns. The impact of tax fraud can be far-reaching, affecting not only the individual or business committing the fraud, but also the government and the public at large. In this article, Eastcoastlaws.com will explore the topic of criminal tax fraud in New York, including the types of activities that may constitute tax fraud, the penalties for committing tax fraud in the state, and what individuals and businesses can do to protect themselves from allegations of tax fraud.
Overview Of Criminal Tax Fraud In New York: New York Tax Law 1801
Prosecutors must first and foremost either persuade their criminal attorney that there is proof of their guilt beyond a reasonable doubt or actually prove the same at a trial before proceeding to the stage of imprisonment, probation, or any other sentence. Prosecutors must prove that you did what is known as a “tax fraud act” in order to win such a case. A “tax fraud conduct,” according to New York State Tax Law 1801, covers the following instances (in no particular order):
- Failing to submit a tax report or return
- Filing a fraudulent tax return or other documents that have materially phony or fake information
- Not submitting or remitting a particular tax that is due to the State of New York
- Failing to pay taxes
- Scheming to cheat the State of New York by making or providing fraudulent representations that are material and related to a tax
This is not an exhaustive list; to determine whether your actions qualify as a “tax fraud act,” as claimed by the Attorney General or a District Attorney, contact your criminal lawyer or criminal tax fraud attorney.
A breach of the New York State Tax Law and a subsequent conviction for a criminal tax fraud offense can result in varied degrees of jail, just like most felonies under the New York Penal Law. The most serious of the New York Criminal Tax Fraud offenses can result in a sentence of imprisonment with a mandatory minimum of up to three years and a mandatory maximum of up to twenty-five years, while the least serious offense may be a misdemeanor punishable by up to one year in jail. Four, seven, or fifteen years in a New York State jail can be the maximum penalty in the interim.
Types Of Criminal Tax Fraud In New York
There are several types of criminal tax fraud that can occur in New York. Some of the most common types include:
- Filing False Tax Returns: This type of tax fraud involves intentionally providing false or misleading information on tax returns in order to lower the amount of taxes owed or increase the amount of a refund.
- Concealing Income: This type of tax fraud involves intentionally failing to report all or part of the income earned, either through cash transactions or by diverting income to offshore accounts.
- False Claims for Deductions or Credits: This type of tax fraud involves claiming deductions or credits that the taxpayer is not entitled to or inflating the number of legitimate deductions or credits.
- Failure to Collect or Pay Taxes: This type of tax fraud involves intentionally failing to collect or pay taxes that are due, either as an employer or as a taxpayer.
- Identity Theft: This type of tax fraud involves stealing someone else’s identity and using it to file false tax returns or claim refunds.
It is important to note that tax fraud is a serious crime that can result in significant fines and even imprisonment. If you suspect that someone is committing tax fraud, you should report it to the appropriate authorities.
Is Tax Fraud A Felony In NY?
Yes, tax fraud is considered a felony in New York (NY) if the amount of taxes owed exceeds a certain threshold or if the individual intentionally evades paying taxes. Tax fraud involves an individual or entity purposely misrepresenting information on their tax returns to evade taxes, thereby depriving the government of its lawful revenue.
The New York State Department of Taxation and Finance (DTF) has the authority to investigate and prosecute tax fraud cases. If found guilty, individuals may face serious consequences, including significant fines and imprisonment. The severity of the penalties depends on the amount of taxes evaded, the length of time over which the fraud occurred, and other factors.
The DTF has various tools to detect tax fraud, including data analytics and working with other government agencies, such as the Internal Revenue Service (IRS) and law enforcement. The DTF also encourages individuals to report suspected tax fraud through its whistleblower program, which offers rewards to those who provide credible information leading to the collection of taxes owed.
Degrees For Criminal Tax Fraud In New York
First-Degree Criminal Tax Fraud: NY TAX LAW 1806
Criminal tax fraud in the first degree is essentially the same as its “sister” offenses of lesser degrees. In other words, the crime’s basic component is unchanged. You are guilty of this felony if you willfully commit a “tax fraud act,” such as filing a tax return with materially false information or failing to charge sales tax, with the purpose to defraud. The difference between NY Tax Law 1806 and the smaller laws is that the state’s underpayment or overpayment of money must exceed $1,000,000. Remember that the total sum involved in this case has to be “taken” over the course of a year.
It is crucial to realize that Criminal Tax Fraud in the First Degree is rarely if ever, charged as a stand-alone offense. This offense frequently has connections to other, more serious crimes. While some of these charges are also “B” felonies, some may only be “minor” felonies like “D” and “E” offenses. These offenses are all punishable by state prison time and have comparable aftereffects.
Second Degree Criminal Tax Fraud: NY Tax Law 1805
Criminal Tax Fraud in the Second Degree is similar to Grand Larceny in the Second Degree in that the theft or value of the tax fraud, as previously noted, must be larger than $50,000 but not more than $1,000,000. Yet, if you engage in any additional “tax fraud acts,” you are guilty of Criminal Tax Fraud in the Second Degree. Withholding sales tax from the government or filing a tax return with materially false information are both examples of “tax fraud acts.”
Yet, these actions alone do not constitute a crime. You must have acted purposefully and fraudulently when you committed this “tax fraud conduct,” which led to your underreporting or getting a higher return than you were entitled to.
Intentionally failing to collect sales tax on goods sold at your store in order to defraud the state of New York would be an easy hypothetical example of a violation of NY Tax Law 1805. It might be simpler for you to move the goods if you didn’t collect sales taxes. For instance, if the amount of sales tax that wasn’t collected or returned was $100,000, you might have engaged in second-degree criminal tax fraud. To make things even more apparent, you would also be in violation of this law if you materially revised your tax return and were underpaid by the same amount.
Third Degree Criminal Tax Fraud: NY Tax Law 1804
Simply put, if you commit a “tax fraud act,” you are guilty of Criminal Tax Fraud in the Third Degree. A “tax fraud” conduct is one that willfully provides substantially incorrect information on a tax return or during a tax audit, according to the Tax Code of New York. Another option is purposefully omitting to pay taxes due to the State of New York. However you choose to act, it must be with the intent to deceive. You must have defrauded New York in an amount larger than $10,000 but not more than $50,000 during a one-year period, assuming your conduct has proved these factors.
In other words, you would have benefitted or stolen by paying $25,000 less than your actual tax liability if your tax liability was $100,000 but you knowingly cheated the State of New York by filing a materially false return showing you only owed $75,000. It’s crucial to understand that in order to commit this crime, you do not need to withhold money. A violation would likewise be established if the recipient received an excessive return for the same sum.
Fourth Degree Criminal Tax Fraud: NY Tax Law 1803
If you engage in a “tax fraud act” with the purpose of evading specific taxes, you are guilty of criminal tax fraud in the fourth degree. Also, you must defraud the state of more than $3,000 but no more than $10,000 less than the amount of unpaid taxes during a period of time no longer than a year. In regards to the second element of this offense, it is sufficient if you, for instance, underpay your taxes by $4,250 or receive a refund that is $4,250 higher than what is owed to you. Keep in mind that the prosecution would still need to prove your intent to deceive. Simple underpayment or an exorbitant reimbursement is insufficient.
You must perform a “tax fraud act” in addition to having the intent to defraud and steal money from New York State worth more than $3,000 but not more than $10,000. Failure to pay taxes, failure to collect sales taxes, failure to file a tax return, and filing a return with a deliberate and material misrepresentation are a few instances of “tax fraud acts.”
Fifth Degree Criminal Tax Fraud: NY Tax Law 1802
According to New York Tax Law 1802, criminal tax fraud in the fifth degree is a reasonably simple offense. You are guilty of this offense if you perform a tax fraud act as that term is used in the statute. The lowest level criminal tax fraud offense, NY TL 1802, carries a maximum one-year jail sentence. Although it is a separate felony from the other levels of criminal tax fraud, it serves as the foundation for those more serious crimes. Criminal Tax Fraud in the Fifth Degree is generally neither the top count nor the most serious count on a criminal complaint.
Even though this crime may seem simple, you must grasp what a “tax fraud act” is in order to determine whether you have committed criminal tax fraud in the fifth degree or any other degree. Giving factually incorrect information on a tax return, withholding sales tax, or even creating a fake certificate to prove that taxes don’t apply to a certain transaction are a few examples of tax fraud. To be clear, while monetary value is directly important to other degrees of criminal tax fraud, doing a tax fraud act constitutes a crime regardless of whether there is any monetary loss or damage at all, even if it is only a few pennies.
Penalties For Criminal Tax Fraud In New York
Criminal tax fraud in New York is a serious offense that can result in severe penalties for the offender. The penalties for criminal tax fraud in New York include fines, imprisonment, and restitution. Here are the penalties for criminal tax fraud in New York:
First-Degree Criminal Tax Fraud
In terms of possible punishments and side effects, there is no more crippling and hazardous white-collar crime than first-degree criminal tax fraud. New York Penal Law 1806, a “B” felony, carries an obligatory jail sentence for all violators, regardless of background. You would risk a minimum of one to three years in prison and a maximum of eight and a third to twenty-five years if found guilty of violating NY Tax Law 1806 without any prior criminal history. In contrast, you would be sentenced to a minimum of four and a half to nine years in jail and a maximum of twelve and a half to twenty-five years if you had a prior crime during the previous ten years.
No matter the range or set of guidelines you are subject to, all of these possible punishments are serious and demonstrate how important it is to have the counsel of a criminal attorney experienced in New York white-collar offenses.
Second Degree Criminal Tax Fraud
One of the more frequent tax offenses in New York that lead to incarceration for those who are indicted and imprisoned is criminal tax fraud in the second degree. This “C” felony involves tax offenses where the value of the money withheld or received is greater than $50,000 and equal to or less than $1,000,000. For a person with no prior criminal history, the maximum sentence is fifteen years in jail.
Third Degree Criminal Tax Fraud
According to New York Tax Law 1804, criminal tax fraud in the third degree is a class “D” felony. NY Tax Law 1804, then, is a white-collar larceny offense that carries a maximum seven-year state prison sentence. For a first-time offender, the sentence might range from two and third to seven years in prison. If this is not your first felony conviction, you might be sentenced to a mandatory minimum of two to four years in prison and a maximum of three and a half to seven years.
Fourth Degree Criminal Tax Fraud
According to New York Tax Law 1803, the first felony level of criminal tax fraud is called criminal tax fraud in the fourth degree. Criminal Tax Fraud in the Fourth Degree is actually an “E” felony that carries a maximum four-year prison sentence for first-time offenders. While the law does not require mandatory incarceration for a first-time offender, you will face a mandatory minimum of one and one-half to three years in prison if you are a predicate felon.
Fifth Degree Criminal Tax Fraud
According to New York Tax Law 1802, criminal tax fraud in the fifth degree is a reasonably simple offense. You are guilty of this offense if you perform a tax fraud act as that term is used in the statute. The lowest level criminal tax fraud offense, NY TL 1802, carries a maximum one-year jail sentence. Although it is a separate felony from the other levels of criminal tax fraud, it serves as the foundation for those more serious crimes. Criminal Tax Fraud in the Fifth Degree is generally neither the top count nor the most serious count on a criminal complaint.
Investigations And Prosecutions Of Criminal Tax Fraud In New York
Criminal tax fraud refers to the deliberate attempt of an individual or a business entity to evade taxes by misrepresenting the amount of taxable income or overstating deductions. In New York, investigations and prosecutions of criminal tax fraud are handled by the New York State Department of Taxation and Finance (DTF) and the New York State Attorney General’s Office.
The DTF has the authority to investigate and prosecute criminal tax fraud cases through its Criminal Investigations Division (CID). The CID works with other law enforcement agencies, including the New York State Police, to identify and investigate tax fraud cases. The CID also conducts audits and uses data analytics to detect fraudulent activities.
Once a case is identified, the CID conducts a thorough investigation, which may include reviewing financial records, interviewing witnesses, and conducting surveillance. If the CID finds evidence of criminal tax fraud, the case is referred to the New York State Attorney General’s Office for prosecution.
The Attorney General’s Office has a dedicated Taxpayer Protection Bureau that handles criminal tax fraud cases. The bureau is responsible for prosecuting individuals and businesses that engage in tax fraud schemes, including money laundering, tax evasion, and false statements on tax returns.
To successfully prosecute a criminal tax fraud case, the Attorney General’s Office must prove that the accused individual or business knowingly and willfully committed the fraudulent acts. This can be challenging, as tax fraud schemes are often complex and involve multiple parties.
If convicted of criminal tax fraud, the penalties can include fines, restitution, and imprisonment. In addition to criminal penalties, the accused may also face civil penalties, including the repayment of taxes owed plus interest and penalties.
Prevention Of Criminal Tax Fraud In New York
Criminal tax fraud refers to any deliberate attempt by individuals or businesses to avoid paying taxes or filing accurate tax returns. Tax fraud is a serious criminal offense in the state of New York, and it can result in severe penalties and even imprisonment. To prevent criminal tax fraud, the state of New York has implemented various measures that individuals and businesses must follow.
One of the most critical steps in preventing criminal tax fraud is to ensure that all individuals and businesses file accurate and complete tax returns. The state of New York has implemented strict regulations that require individuals and businesses to report all their income and expenses accurately on their tax returns. Failure to report all income and expenses can result in hefty fines and penalties. Additionally, businesses that engage in fraudulent practices such as underreporting sales, keeping two sets of books, or not paying payroll taxes can face criminal charges.
Another essential step in preventing criminal tax fraud is to ensure that individuals and businesses comply with all state and federal tax laws. The state of New York has various tax laws that individuals and businesses must follow, including sales tax, property tax, and personal income tax laws. Failure to comply with these laws can result in criminal charges, fines, and even imprisonment.
To ensure compliance with tax laws, the state of New York has established various agencies that oversee tax compliance. These agencies include the New York State Department of Taxation and Finance, the New York State Department of Labor, and the Internal Revenue Service. These agencies are responsible for investigating any cases of tax fraud, auditing tax returns, and prosecuting individuals and businesses that violate tax laws.
The state of New York also provides resources and education to individuals and businesses to help them understand their tax obligations and avoid tax fraud. The Department of Taxation and Finance provides free seminars, webinars, and other resources to educate individuals and businesses on their tax obligations and how to avoid tax fraud. Additionally, the state of New York has established a tax fraud hotline that individuals can call to report suspected cases of tax fraud.
Defense For Criminal Tax Fraud In New York
Criminal tax fraud is a serious offense in New York, and those accused of such crimes can face severe penalties. However, individuals accused of criminal tax fraud have the right to defend themselves against these charges. The following are some possible defenses that may be used in a criminal tax fraud case in New York:
- Lack of intent: Criminal tax fraud requires a willful attempt to evade taxes or to file false returns. If the accused can prove that there was no intention to defraud the government, they may be able to avoid conviction. For example, if the accused can show that they made an error in their tax return unintentionally, it may help their case.
- Mistake of fact: If the accused can demonstrate that they made an honest mistake in their tax return and that it was not intentional, it could be a defense against criminal tax fraud charges. This may be the case when the accused relied on advice from a tax professional or misunderstood the tax laws.
- Duress: If the accused can prove that they were coerced or threatened by another person to commit tax fraud, they may be able to use this as a defense. For example, if a business owner was forced to underreport income by a business partner who threatened violence, it may be a valid defense.
- Entrapment: If the government or law enforcement coerced or induced the accused to commit tax fraud, it may be a defense. However, the accused must prove that they were not predisposed to commit the crime and that the government or law enforcement induced them to do so.
- Lack of evidence: The prosecution must prove beyond a reasonable doubt that the accused committed the crime of tax fraud. If there is insufficient evidence to prove guilt, the accused may be acquitted.
Resources For To Help Prevent Criminal Tax Fraud In New York
Here are some resources that can help individuals and businesses prevent criminal tax fraud in New York:
- New York State Department of Taxation and Finance: This website provides information on tax laws, regulations, and compliance, as well as resources for individuals and businesses to help them understand their tax obligations. The Department also offers free seminars, webinars, and other resources to educate individuals and businesses on how to avoid tax fraud. Visit: https://www.tax.ny.gov/
- New York State Department of Labor: The Department of Labor provides information on wage and hour laws, unemployment insurance, and worker’s compensation. Compliance with these laws is critical to avoiding tax fraud. Visit: https://dol.ny.gov/
- Internal Revenue Service: The IRS is the federal agency responsible for enforcing tax laws in the United States. Their website provides information on federal tax laws, regulations, and compliance. Visit: https://www.irs.gov/
- New York State Division of Criminal Justice Services: The Division of Criminal Justice Services is responsible for investigating and prosecuting criminal tax fraud in New York. Their website provides information on how to report suspected tax fraud and what to do if you are the victim of tax fraud. Visit: https://www.criminaljustice.ny.gov/
- New York State Attorney General’s Office: The Attorney General’s Office is responsible for enforcing consumer protection laws and prosecuting financial crimes. Their website provides information on how to report suspected tax fraud and what to do if you are the victim of financial fraud. Visit: https://ag.ny.gov/
By utilizing these resources, individuals and businesses can educate themselves on tax laws and regulations, ensure compliance, and report suspected tax fraud. This can help prevent criminal tax fraud and contribute to a fair and just tax system in New York.
