As a small business owner, you are responsible for keeping accurate financial records and filing your business’s tax returns each year. This can be a complex process and subject to error, especially if you complete this task without the assistance of a certified accountant.
All California business owners should understand what constitutes tax evasion to prevent serious felony charges. The government does not look favorably on tax fraud; if convicted, you could face prison time and high fines. What should you understand about tax evasion?
A mistake is not tax fraud
The government understands that you may make an honest mistake on your taxes. Fortunately, you can only be convicted of tax fraud if the United States Attorney proves that you either deliberately evaded paying your taxes or intentionally assessed your tax liability incorrectly.
Instead of criminal charges, an honest mistake may result in additional fees to the IRS, interest on the due taxes and payment of the taxes themselves.
Common examples of tax fraud
There are many ways that businesses may try to evade taxes, including:
· Underreporting earnings
· Overreporting expenditures
· Withholding taxes from employees, but not paying them to the government
· Reporting falsified financial information
· Concealing assets in alternative bank accounts
· Overstating tax deductions
There is no financial threshold to make tax evasion a felony. Regardless of the monetary implications on your company, you can be charged with tax evasion if you deliberately withhold taxes owed to the government.
How can you avoid charges?
Keep careful financial records of all earnings, expenses and employee information. If you feel overwhelmed organizing your books, hire a certified accountant to keep everything in order. They should be able to guide you through the complex tax codes, properly track and report your financial statements.
Tax evasion is a serious criminal charge. If you are suspected of tax fraud, you should speak with an experienced attorney to discuss your circumstances and possible criminal defense.