Criminal tax fraud covers a wide range of crimes that cheat the New York state government out of taxes owed. Examples of tax fraud crimes include:
- Failing to file a return
- Filing a false return
- Intentionally failing to report all income
- Knowingly claiming unauthorized deductions
Because tax fraud crimes vary in severity, so do the state penalties. Criminal tax fraud in the first degree is a Class B felony, which carries a 1-25 year sentence. There are five degrees of criminal tax fraud in New York, with the fifth degree being a misdemeanor subject to imprisonment for up to one year.
Defendants should hire an attorney upon being charged with criminal tax fraud. The potential penalties can be severe, and experienced legal advice is mandatory.
On December 30, 2013 the Manhattan District Attorney’s office announced the recovery of approximately $11 million in unpaid taxes. The investigations, led by the Money Laundering and Tax Crimes Unit, resulted in court orders for the repayment of approximately $8 million, and collections of approximately $11 million in outstanding taxes owed to the city and the state.
Criminal tax fraud in the first degree is when a person intentionally files a tax return with false information or fails to charge sales tax. The amount involved must be in excess of $1,000,000, and must have been stolen within a one-year period. (This period is applicable to all tax fraud crimes.) Second-degree tax fraud covers values greater than $50,000 and equal to or less than $1,000,000. Third degree tax fraud occurs when the sum defrauded is between $10,000 and $50,000. Fourth degree tax fraud is for amounts between $3,000 and $10,000. Fifth degree tax fraud is a misdemeanor punishable by up to one year in jail.
- Grand Larceny
- Offering a False Instrument for Filing
- Falsifying Business Records
If convicted of criminal tax fraud, a person could face anything from 1-25 years in prison, depending on the degree. Criminal tax fraud in the fifth degree is a misdemeanor punishable by up to one year in jail.
Infancy (for people under sixteen) and mental disease / defect, and proven lack of intent to defraud are all viable defenses.
R.I.C.O. does not regard tax fraud itself as a racketeering activity, but in United States v. Porcelli, which involved evasion of state sales taxes, a R.I.C.O conviction was delivered because there was an “enterprise” element involved. (The defendant underreported sales for his gas stations.) Because R.I.C.O. supports forfeiture provisions (which New York does not), the jury returned a verdict of forfeiture for the unpaid sales taxes.