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Marinaro Law Firm

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Home 9 Fraud 9 The Penalty for Tax Fraud in PA & The Impact On You

The Penalty for Tax Fraud in PA & The Impact On You

a document that says tax fraud in red letters under a magnifying glass

Living in Pennsylvania comes with several tax obligations. One of the most important is filing your income taxes. Filing your state and federal taxes accurately and on time is integral to avoiding potential fines and penalties associated with tax fraud and other filing violations.

The Pennsylvania Department of Revenue is responsible for enforcing the state’s laws concerning taxation. Tax fraud or tax evasion is a serious criminal offense. Tax fraud in Pennsylvania carries several consequences, including steep fines, jail time, and other penalties.

You could face stiff financial penalties for each violation if found guilty of committing tax fraud or tax evasion, which is why you need a criminal fraud lawyer. This blog post will discuss the penalty for tax fraud in Pennsylvania, the penalties for not filing state tax returns, and the impact it could have on you and your life.

What Is Considered To Be Tax Fraud?

Tax fraud is the intentional evasion of taxes by under-reporting income, claiming improper deductions and credits, or engaging in other illegal activities. In most cases, tax fraud is performed by intentional misrepresentation or omission of facts on tax returns and related documents. Tax fraud can take many forms, including filing false returns, claiming false deductions, failing to report all income, and hiding money in offshore bank accounts.

Filing A False Tax Return & Other Examples of Fraud

Filing a false return is a form of tax fraud that involves intentionally overstating deductions or misstating income to reduce the amount of taxes due. Other examples include:

  • Failing to declare all sources of income, such as investment profits and earnings from side jobs
  • Claiming deductions for which a taxpayer does not qualify
  • Inflating business expenses
  • Fabricating charitable contributions
  • Falsely reporting capital gains or losses
  • Failing to pay payroll taxes for employees

Types of Deliberate Tax Avoidance Strategies

In addition to filing false returns, some individuals also engage in aggressive tax avoidance strategies that break the law but are not considered fraudulent. These strategies involve taking advantage of loopholes in the tax code to reduce their taxable income or defer taxation on investments legally. Tax evasion techniques are relatively common and can be the first red flag to the state or federal government that you engaged in illegal activities.

What Happens If You Are Brought Up On Federal Tax Fraud Charges

If you are brought up on federal criminal tax fraud charges, it may be a very serious offense that could result in severe penalties. Federal tax fraud is considered an intentional criminal act and is punishable by time in prison, heavy fines, and even the forfeiture of assets.

A Visit From the IRS

Typically, the IRS conducts investigations into possible cases of federal tax fraud. They may send an auditor or other tax authorities to examine your financial records and investigate any discrepancies or suspicious activity. The IRS can then refer the matter to the Department of Justice (DOJ) if they believe sufficient evidence exists to proceed with criminal charges.

Your Day In Court

Once a case of federal tax fraud or tax evasion has been brought to court, the process can be complex and lengthy. The prosecution will present evidence to the court in an attempt to prove that you have intentional conduct of tax fraud. This evidence may include reviewing financial records, witness testimony, or other relevant documents. If the prosecution can establish that you have committed a criminal act, you may be convicted and sentenced accordingly.

That’s why you need a criminal fraud lawyer like Attorney Marinaro on your side. He’ll fight for your right in court and work hard to get you the justice you deserve, so that you don’t have to face the penalty for tax fraud.

Fraud Charge Convictions & Penalties

Depending on the severity of the tax fraud conviction, prison terms can range from a few months to several years in length. According to federal tax laws, the fines in federal fraud cases can vary widely depending on how much money was involved in the fraudulent activity and other factors, such as whether you are a first-time offender or have prior convictions.

What Are The Pennsylvania Tax Penalties?

a 1040 tax return under handcuffs

If an individual in the state of Pennsylvania fails to file their state income tax return, they face serious consequences. The PA Department of Revenue has the right to charge a penalty for failure to file taxes on time. The tax laws state that the penalty for tax fraud is typically 5% of the amount of unpaid tax per month, up to a maximum of 25%. In addition, there may be interest on any late payment of tax due.

Other Instances In Which You Could Face Tax-Related Penalties In Pennsylvania

Not only can failure to file or pay your taxes on time result in severe penalties but there are other situations in which you could pay tax-related fines to the state of Pennsylvania. Here are some other common scenarios in which this would happen:

Underpayments of Tax

The state also imposes a fee on underpayments of tax, which is calculated at 10% of the amount due. This penalty for tax fraud applies when an individual has not paid enough tax during the year, either through withholding or estimated tax payments.

Failure to Pay

In some cases, individuals may also face a “failure to pay” penalty for neglecting to make timely payments of taxes due. If the amount due to the state of Pennsylvania is $1,000 or more, it has to be paid via electronic funds transfer (EFT). Failure to do so electronically will result in a fee equal to 3% of the payment amount, up to a maximum of $500 per violation.

Filing A False Tax Return

Filing a false or fraudulent tax return in Pennsylvania can lead to severe legal penalties. According to the Pennsylvania Department of Revenue, if you knowingly file an incorrect or false return, 50% of the underpaid amount will be added to the tax you owe to the state. Suppose you don’t pay the withholding taxes owed by the quarterly reconciliation date. In that case, it will result in a monthly penalty of 5% of the underpayment, which is capped at 50% of the total underpayment.

Uncollectable Funds

A failure to pay Pennsylvania state tax withholding payments made via check or electronic funds transfer will result in an additional penalty equal to 10% of the payment amount, with a minimum penalty of $25 and a maximum of $100. In addition, late or rejected payments will also be subject to this penalty.

Avoid the Penalty for Tax Fraud With Marinaro Law Firm

Whether you need help with employment taxes not being taken out correctly or are in over your head with potential tax fraud charges, let the criminal defense lawyers at Marinaro Law Firm help you avoid the penalty for tax fraud. Contact us today to set up your legal consultation, and let us put your mind at ease.


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