Of the possible problems that can send folks running to tax attorneys, few are as potentially scary as allegations of tax evasion. While all IRS notices tend to be frightening-looking, a notice alleging tax evasion is something you'll want to make copies of and immediately have a tax attorney review. Your response in the first couple of months will dictate how this situation will unfold, and here are four things to strongly consider.
Determining What, If Anything, Happened
Your first order of business will be pulling all of your documents for the tax years in question. As always, make sure to produce copies that you can share with tax attorneys when you seek consultations.
Look at any specific sources of information that might indicate who was involved with mistakes or malfeasance. Check for signatures and dates.
You should also consider some issues further downstream, especially looking at accounting records. For example, did someone set up a type of account that might look suspicious? Were accounts in foreign banks handled property? A tax attorney can help you sort these questions out.
Sending Back an Initial Response
The one giant mistake you can make in these circumstances is not responding at all. Most notices from the IRS include dates that filers have to respond by. Get an appointment with a tax attorney ASAP. Meet with them and determine what your response will be.
Fess Up, If Necessary
If it appears the notice's allegations are accurate, you should strongly consider explaining whatever the situation is to the government. Payment arrangements can be made, and it's not unusual for tax courts to waive penalties after people have complete good-faith efforts to get right.
Remember, the best defense is often that tax evasion didn't occur but mistakes were made. This reduces criminal exposure as long as it represents an honest accounting of what happened.
If someone within or attached to your business did engage in evasion, it's best to cooperate with any forthcoming investigation. Someone who willingly messed with your taxes did as much harm to you as they did to the government, so don't feel bad about turning the IRS loose on them.
Ride Things Out
The process of resolving cases like this is rarely simple and fast. If there have been threats of fines, penalties, or criminal prosecution, your tax attorney will make every effort to have your cooperation noted by the court. The important things are to remain steady and follow the advice of counsel.
If you need help with a tax evasion case, contact an attorney like Harris Shelton Hanover Walsh PLLC.