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Not paying energy-related taxes can result in evasion or fraud charges

As high-profile energy industry investor Morris Zuckerman can attest, failure to pay taxes on money earned through energy production can result in serious criminal tax evasion or fraud charges. The Zuckerman case is a complicated one, involving a number of years and myriad investments on behalf of his Manhattan-based M.E. Zukerman & Co. (MEZCO).

Zukerman's firm allegedly used false statements to accountants, backdated promissory notes, a fraudulent board resolution, shell corporations, family trusts and the purchase of high-value artwork in an attempt to evade taxes on more than $130 million in profits from the sale of a subsidiary company's stake in the infamous Cortez oil pipeline. He is facing federal criminal charges including tax evasion, wire fraud and obstructing the IRS relating to these actions and others that helped him avoid paying tens of millions of dollars in corporate and personal taxes.

Smaller scale, same issues

While your income might not be on the same level as that of Morris Zuckerman, the fact remains that you are obligated to pay both state and federal taxes on any profits you make as a result of energy production investments. This includes oil and gas rights as well as renewable energy sources like solar, wind and hydroelectricity.

There are a number of tax credits available for individuals and corporations that produce our nation's energy resources, and these could significantly limit the amount of taxes that you end up paying. That being said, you are still responsible for any taxes that are due on your income, even if the industry is in the midst of a "bust" period instead of a "boom." It can be difficult to cover these payments if you don't have the same regular income coming in, but they must still be paid.

Arrangements could be made regarding payment plans or settlements, but you need to take the initiative to contact tax authorities in order to avoid tax evasion or fraud charges. If you've already run into trouble with the IRS or Texas state tax agencies, contact a skilled tax attorney in your area who may be able to help you mitigate the consequences.

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