Taxpayers in the United States face the most far-reaching tax enforcement regime in the world. In fact, the reach of the IRS and DOJ is truly global. Not only do U.S. taxpayers face a worldwide obligation to report and pay tax on all income, they now also face the reach and consequences of America’s global banking law Foreign Account Tax Compliance Act (FATCA). The failure to satisfy these and other obligations can lead to significant fines, penalties, and other serious consequences. While inadvertent, intentional, and voluntary tax compliance failures can all result in harsh consequences, acts that are perceived as willful carry significantly heightened penalties. Willful violations are those that are committed due to a voluntary or intentional disregard of a known legal duty. Alternatively, in a civil context, willfulness can also include reckless indifference to a legal obligation. By contrast, acts that are non-willful can include simple errors, mistakes, oversights and other scenarios where the taxpayer did not intend to bring about the result.
The Hoffman Law Firm is dedicated to assisting taxpayers facing a tax audit or serious tax charges. Whether you are facing allegations of a willful or non-willful tax violation, the experienced tax professionals of the Hoffman Law Firm can work to provide strategic solutions to the concern. To schedule a free and confidential legal consultation call us at 800-897-3915 or contact us online.
What Happens When an IRS Employee is Accused of Willful Tax Crimes?
Aside from having an ethical duty to satisfy their obligations under the federal Standards for Ethical Conduct, employees of the IRS are also subject to organizational oversight. Furthermore, per Section 1203 of the IRS Restructuring and Reform Act of 1998 states that employees that are found to have willfully flout and violate U.S. law should be terminated from their employment. Two of the grounds listed to serve as the basis for termination is the failure to file a timely income tax return and the willful understatement of one’s federal tax liability. The only power to reduce or mitigate this law rests with the IRS commissioner.
There are supposed to be multiple bodies responsible for identifying and addressing potential instances of tax non-compliance by IRS employees. Unfortunately it appears that far too many willful tax violators are being permitted to remain in the IRS’ employee ranks. In fact, a recent study performed by the Treasury inspector general for Tax Administration found that only 39 percent of employees found to be willful tax violators was fired by the IRS. That is, 61 percent of willful tax cheats caught by the IRS did not lose their jobs. Even more troubling is the fact that just under 30 percent of the known tax cheats actually received promotions within one year of being caught.
What can Happen to a Taxpayer Accused of Willful Tax Violations or Crimes?
Taxpayers who not only fail to satisfy their tax obligations, but also who engage in willful failures to comply with the U.S. Tax Code can face significant fines and penalties including, depending on the tax crime charged, a potential prison sentence. For instance, consider the penalties for a failure to satisfy one’s FBAR obligation. In light of the potential $10,000 fine an inadvertent error or mistake can be punished harshly, but a willful failure can be punished even more severely. If it is believed that the failure to file FBAR was the product of intentional or voluntary conduct the violation can be punished by the greater of $100,000 or 50 percent of the original account balance. Furthermore, because willfulness permits the IRS to look back for up to six years, each year of willful noncompliance can be punished. While penalties for non-willful FBAR violations can reach into the tens of thousands, fines in the hundreds of thousands of dollars is merely the starting point for willful FBAR violations. Penalties for willful FBAR violations routinely exceed the amount originally held in the account. In short, everyday taxpayers face treatment that is so harsh that the National Taxpayer Advocate issued a scathing criticism of the IRS and its handling of offshore tax issues last January. However despite this criticism it seems that everyday taxpayers still must worry about facing incredibly harsh penalties for willful tax violations.
Rely on our Tax Controversy Experience
If you have been accused of a tax crime or violation you face serious penalties, but you don’t have to face trained IRS agents alone. The Hoffman tax Law Firm is dedicated to fighting for taxpayers facing civil or criminal tax charges. To schedule a free and confidential initial tax consultation, call 800-897-3915 or contact us online today.