What Charges and Penalties Follow Tax Fraud in South Carolina?

Although tax laws are needlessly complex, businesses and individuals have some clear obligations, including paying quarterly estimated tax or withholding tax. If a person or business fails to file taxes promptly, all sorts of headaches can result. Simple mistakes are not actionable, but the real risk comes when the government suspects you are deliberately avoiding your tax obligations. The result could be serious tax fraud penalties.

Contact William G. Yarborough, an experienced Greenville fraud lawyer. Our firm has over three decades of experience in criminal defense, including fraud charges. Our objective in every case is to protect our clients’ rights and ensure they receive fair treatment.

What charges and penalties follow tax fraud in South Carolina?

Income taxes are a standard obligation imposed on people and businesses in South Carolina. Taxpayers have to cover both state and federal income taxes. Employees benefit from their employers withholding estimated income taxes from their paychecks. Self-employed professionals and small business owners, as well as those with unusual streams of income, may need to pay estimated taxes on their behalf quarterly.

Taxpayers with recent income also typically need to file an income tax return annually to reconcile estimated payments with the actual income tax amount owed. Some people fail to pay enough or make mistakes when preparing their tax returns. Those errors could be honest mistakes, or they could be warning signs of criminal conduct.

In some cases, those accused of intentionally underpaying their taxes or committing a similar form of tax fraud might find themselves facing criminal charges. Many people panic at the thought of criminal prosecution. Those who have information about what to expect can employ a more measured response to the situation.

What charges can the state pursue? 

Those accused of fraudulently misrepresenting their financial circumstances on an income tax return are likely to face tax evasion charges. Tax evasion involves intentionally trying to avoid income taxes that are due and payable. Numerous actions can lead to claims of tax evasion, including refusing to file an income tax return, omitting certain streams of income, failing to disclose certain property, or making fraudulent claims to diminish tax obligations.

Under state statutes in South Carolina, tax evasion is a felony offense that can carry up to $10,000 in fines or up to 5 years in prison. Those facing federal tax evasion charges are at risk of up to five years in prison and up to $100,000 in fines. The defendant may also have to cover court costs and may have to work out a payment arrangement to cover their tax arrears.

In cases involving unusual circumstances, such as tax preparer fraud or payroll tax fraud, the circumstances of prosecution can be somewhat different. Those facing allegations of tax evasion or fraud often need help asserting themselves.

Learning more about what constitutes tax evasion and reviewing financial records can help people develop appropriate defense strategies. Tax evasion allegations often have reasonable explanations that do not involve intentional criminal activity. People who have proper support when responding to charges can potentially avoid unfair convictions, criminal penalties, and major financial consequences.

What Defenses Can You Raise to Tax Fraud Charges?

Facing tax evasion charges is a terrifying experience. Feeling the full force of the IRS against you might conjure up images of decades in the federal penitentiary, along with other tax fraud penalties.

Helpfully, the government has a high burden of proving you are guilty of tax evasion. These cases turn on the defendant’s mental state: whether they intentionally and deliberately failed to pay or file taxes. A simple mistake should not result in conviction.

Some defenses we might raise to tax fraud charges include:

• You don’t owe any unpaid tax. The government is often wrong about whether an individual or business owes taxes. You should not immediately assume you have to pay or file. Instead, you might have met your tax obligations.
• You are entitled to the deductions you claim. Many deductions are not so “black and white.” You might be in a gray area, in which case, you did not break the law by claiming the deduction in dispute.
• You did not intend to evade your obligations. Perhaps you made a simple mistake. You might have forgotten an income stream. Unless a defendant admits to intent, the government has an uphill climb to prove intent.
• You made an honest mistake. A person should not be prosecuted for a careless error. Negligence is not criminal, although it can still result in late payment penalties and other problems.
• Too much time has passed. The government does not have an unlimited number of years to pursue tax evasion charges. If too much time has passed, then we can argue the prosecution is untimely and cannot proceed.
• The evidence is too conflicting. Tax evasion requires proof beyond a reasonable doubt. We might point to evidence that shows you did not take any consistent actions to defraud the government.
• Someone else committed tax evasion. This might be a viable defense where the IRS claims a business did not report and pay taxes. Maybe the person to blame is no longer with the company.

These are some of the more common defenses. As with all cases, the best defense is the one most supported by the facts of your case.

Facing Tax Fraud Penalties? Contact a Greenville Fraud Lawyer

Any IRS investigation requires a careful response. Defendants are facing potential economic ruin, to say nothing of time in prison. Do not admit guilt. Instead, contact William G. Yarborough today to coordinate a private meeting with defense counsel.