Tax Crimes Defense · Federal & State
Los Angeles Tax Fraud Attorney
IRS-CI or FTB Contact?
Kovel accountants. Parallel civil defense. Voluntary disclosure.
Daniel S. RubinTax Fraud Defense Attorney
01 — Quick Facts
Tax Fraud — At a Glance
02 — The Law
Federal & California Tax Crimes
Federal tax crimes require proof of an affirmative act of evasion or willful conduct — not mere omission. 26 U.S.C. §7201 (opens in new tab) (evasion), §7202 (payroll tax), §7203 (willful failure to file), and §7206 (false return) form the core. California mirrors most of these under R&TC §19705–§19706.
Tax cases frequently pair with federal fraud and white-collar charges — wire fraud, money laundering, and structuring — because tax loss inflates the guideline range and forfeiture exposure.
03 — Penalties
Tax Fraud Penalties — Federal and California
| Offense | Statute | Statutory Max | Guideline Driver | Restitution | Civil Add-On |
|---|---|---|---|---|---|
| Tax Evasion | 26 U.S.C. §7201 | 5 yrs prison; $250,000 fine | USSG §2T1.1 (tax loss) | Mandatory | 75% civil fraud (§6663) |
| Payroll Tax | 26 U.S.C. §7202 | 5 yrs prison; $10,000 | §2T1.1 | Mandatory | TFRP (§6672 100%) |
| Failure to File | 26 U.S.C. §7203 | 1 yr per year per count | §2T1.1 | Mandatory | Late-filing penalties |
| False Return | 26 U.S.C. §7206(1) | 3 yrs per count | §2T1.1 | Mandatory | 75% civil fraud |
| Aiding False Return | 26 U.S.C. §7206(2) | 3 yrs per count | §2T1.1 | Mandatory | Preparer penalties |
| CA Willful Evasion | R&TC §19705 | 3 yrs prison; $50,000 | — | Mandatory | 75% state fraud penalty |
| CA Failure to File | R&TC §19706 | 1 yr jail; $20,000 | — | Mandatory | Late penalties |
A tax-loss figure of $250,000 produces roughly a level-18 offense under USSG §2T1.1 — before any adjustments for sophistication, obstruction, or role. Every $100,000 of additional loss adds 2 offense levels.
Additional Consequences Beyond the Courtroom
- IRS liens on all real and personal property
- Civil fraud penalty — 75% of underpayment (§6663) plus interest
- Trust-fund recovery penalty (§6672) — 100% personal liability for payroll tax
- Loss of professional licenses (CPA, bar, medical, real estate)
- Immigration: fraud >$10,000 is an aggravated felony
- Passport revocation on seriously delinquent tax debt (§7345)
- Asset forfeiture in fraud-adjacent counts
- Loss of security clearance and government contracting
04 — Defense Strategies
How We Defend Tax Cases
No Willfulness
Tax crimes require willfulness — the voluntary, intentional violation of a known legal duty.
- Reliance on a professional, good-faith mistake, or belief negates it.
Tax-Loss Litigation
Loss drives sentencing.
- We litigate the tax loss with a forensic accountant to strip years of exposure off the guideline range.
Kovel Accountant
Retaining a Kovel accountant through counsel extends attorney-client privilege to the numbers work — protecting sensitive analysis from disclosure.
Voluntary Disclosure
Where eligible, the IRS Voluntary Disclosure Practice can convert a criminal exposure into a civil resolution — a narrow window with strict prerequisites.
Suppression
Overbroad summonses, tainted parallel-proceeding evidence, and improper agent interviews produce exclusion opportunities.
Parallel Civil Defense
IRS civil audits, FTB proceedings, and CDTFA/EDD matters run in parallel.
- Coordinated defense prevents admissions that fuel criminal filings.
05 — Charge Types
Tax Charges We Defend
Tax Evasion
Affirmative acts to defeat tax — false returns, hidden accounts, offshore transfers.
Learn moreFalse Return
Signing a return known to be false in material particulars — perjury-based statute.
Learn moreAiding & Assisting
Preparers, accountants, and advisors charged with knowingly assisting false filings.
Learn moreFailure to File
Willful non-filing. Baseline misdemeanor; escalates with affirmative concealment.
Learn morePayroll Tax Fraud
Trust-fund tax withheld from employees but not remitted — high IRS-CI priority.
Learn moreState Tax Crimes
R&TC §19705
California FTB criminal referrals for false returns, unreported income, and sales-tax evasion.
06 — Possible Outcomes
Possible Outcomes in a Tax-Fraud Case
Case Dismissed or Not Filed
The best possible outcome — no conviction, no record.
- Kovel-protected accountant work-product excludes DOJ evidence
- Suppression of records seized outside the scope of the summons
- IRS Criminal Investigation declines to refer to DOJ Tax
Civil Resolution Instead of Criminal
- Voluntary Disclosure Program resolution
- Civil fraud penalty under IRC §6663 in place of §7201 prosecution
- State FTB civil settlement in lieu of criminal referral
Minimized Sentence
If a conviction cannot be avoided, we fight for the lowest possible exposure.
- Downward departure under USSG §2T1.1 for loss-amount challenges
- Restitution and cooperation credit under §5K1.1
- Home confinement and community-service sentencing
Alternative Resolutions
- Pretrial diversion under 18 USC §3154
- Deferred prosecution agreement with U.S. Attorney
- Offer in Compromise and installment resolution with the IRS
07 — Collateral Consequences
Beyond Prison
- 75% civil fraud penalty on the underpayment (26 U.S.C. §6663)
- IRS lien and levy actions against all assets
- Professional license discipline (CPA, attorney, medical)
- Immigration: aggravated felony exposure on high-loss cases
- Federal contracting and grant debarment
- Passport revocation for seriously delinquent tax debt (§7345)
- Personal liability for corporate trust-fund taxes
- Reputational and business impact — often the largest consequence
08 — FAQs
Tax Fraud Questions — Los Angeles
How do I know I'm under IRS-CI investigation?
Common signs include a visit from IRS Special Agents (not revenue agents), a bank or accountant subpoena, a grand jury subpoena, or an audit that suddenly stalls and goes quiet. If Special Agents identify themselves, criminal investigation has begun.
Should I talk to IRS special agents?
No. Statements to Special Agents can be charged as tax evasion, false statements (18 U.S.C. §1001), or obstruction. Politely decline, request their card, and call counsel immediately.
What is willfulness in a tax case?
Willfulness means the voluntary, intentional violation of a known legal duty (Cheek v. United States). It is the highest mens rea in federal law. A good-faith misunderstanding of the law — even an objectively unreasonable one — can negate willfulness.
Can voluntary disclosure prevent prosecution?
In many cases, yes. The IRS Voluntary Disclosure Practice can resolve criminal exposure civilly if the disclosure is complete, timely, and truthful — and comes before the government initiates investigation. Eligibility is fact-specific and unforgiving; retain counsel first.
How is the 'tax loss' calculated?
For guidelines purposes, tax loss under USSG §2T1.1 is the total unpaid tax attributable to the offense plus related conduct. It is often calculated using presumptions the defense can rebut with a forensic accountant to reduce guideline exposure.
Is a preparer or accountant liable for the client's fraud?
Only if the preparer acted willfully. 26 U.S.C. §7206(2) targets preparers who knowingly aid or assist false returns. Good-faith reliance on client-provided information is a defense — but preparers who help concoct false documents face exposure equal to or greater than the taxpayer.
Can a tax fraud case be resolved without prison?
Yes. Non-prison outcomes include probation with home confinement, downward variance sentencing, deferred prosecution agreements, or civil resolution via voluntary disclosure. Facts, loss amount, and mitigation drive the outcome.
Do state and federal tax cases overlap?
Yes. FTB, CDTFA, and EDD routinely refer cases to IRS-CI (and vice versa). Concurrent civil audit, criminal investigation, and administrative proceedings must be coordinated to avoid admissions that fuel the other track.