Business managers filing taxes

Tips for Defending Against Allegations of Payroll Tax Fraud

Hundreds of businesses and individual entities fall victim to IRS’s tax fraud allegations every year. While some of them are legit and accountable, others face the consequences of a wrong, misinterpreted calculation.

The IRS, along with the Tax Division of the Department of Justice (DOJ), places a high priority on tax loss and theft cases in the US. More than 70% of the total IRS revenue consists of employment taxes, so they make extra efforts to ensure there are no unpaid dues.

If you own a business and more than two of your employees are alleged for committing a tax crime, the impact on the firm can be quite disastrous. You may have to spend several billable hours filing paperwork, sending emails, and making phone calls. Your best bet, in this case, is to hire an experienced tax controversy lawyer in Baltimore. They can help you manage the paperwork and meet IRS deadlines without any slip-ups.

They can take care of the extra work and save your business from prolonged distrust and lost income. While you may conduct your business using rightful practices, there are ways the IRS can get hold of unpaid, withheld taxes from employee paychecks.

If you’ve received a notice from the IRS inquiring about a tax deficit, you should seek legal counsel right away. Here are some tips to defend your firm against the allegations.

1.    Living of Cash Capital

A common yet effective defense raised against tax fraud allegations is to tell the IRS that you’ve lived off of your cash capital. IRS tends to dig into your business transactions including payables, receivables, deposits, and expenses to look for potential slipups. However, they don’t have anything against you holding cash, unrelated to the company.

IRS’s legitimate concerns involve all taxable income and whether or not it’s reported on time. While the IRS may be suspicious about people holding cash outside an interest-bearing account, they don’t report it because it’s non-taxable.

2.    Using Non-Taxable Income

Not all kinds of money receipts are taxable. Nontaxable income comes in various forms such as gifts, inheritances, borrowed money, etc. This defense can be raised against tax deficit allegations.

3.    Sometimes It’s an Honest Mistake

Humans can make mistakes, and the tax deficit on your company’s financials can be one too! A genuine slipup when filing company taxes isn’t a fraud unless you report it.

So, if you make a valid defense that the tax issue wasn’t your intention, you may be able to convince the jury that it was an honest mistake.

Note: Don’t Bluff

While an adept tax controversy lawyer in Silver Spring may help you devise a strong defense action against tax allegations, don’t use this opportunity to bluff. Telling lies can worsen your case. If you’re unsure about something, communicate with your tax lawyer and let them do the talking.

Exercise your Fifth Amendment right to protect yourself from self-incrimination.

At The Lincoln Law, we have experienced tax controversy lawyers on board in Maryland and Washington D.C. We offer expert legal counsel and support for tax preparation, filing, analysis, negotiation, and tax disputes. Feel free to reach out to us at 877-619-9112 or contact us here.

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