According to the Internal Revenue Service (IRS), employment evasion schemes are common. Employment tax evasion involves individuals, employers, and companies that attempt to evade paying income taxes illegally. If convicted of tax evasion, you could serve 5 years in a federal prison and have to pay a $250,000 fine. Business tax evasion is punishable by a $500,000 fine.
If you or your business is under investigation by the IRS, we urge you to speak with an attorney from Okabe & Haushalter as soon as possible. Without an experienced legal representative, you may have difficulty substantiating your innocence in court.
The IRS identifies at least eight common employment tax evasion schemes:
Three of the most prominent ones are explained below:
Although some employment tax evasion schemes are committed without the knowledge of the employees, cash payments rely on a mutual understanding between the employer and the employee. By paying employees with cash, the employer effectively avoids income tax payments. However, employees may lose future benefits through cash payments. Failing to file a tax return is one of the most simply forms of evasion. Similarly, some employers falsify their tax returns to avoid withholding money for tax payments from their employees’ paychecks.
Although employers are responsible to withhold taxes from their employees’ paychecks, employees may be held somewhat responsible. For example, if your employer fails to withhold taxes from your income and you are aware of their crime, you may be held partially liable.
To learn more about income tax evasion and criminal tax defense, call Okabe & Haushalter. The sooner we hear from you, the sooner we can answer your questions.