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The IRS is aggressive about pursuing taxes for high-income individuals and companies, such as those represented by Brown, PC. These taxpayers are often targets of evasion and false return charges. However, if the government lacks evidence that the taxpayer owes taxes or did not file a document, prosecutors may pursue a removal or concealment with the intent to defraud charge.

A conviction for removing or concealing assets from the IRS can result in hundreds of thousands of dollars in fines and forfeiture of valuable assets. The freedom and livelihoods of individual taxpayers are also at risk. With so much at stake, taxpayers should obtain representation at the earliest stages of an IRS investigation or audit.

Removal or concealment with the intent to defraud is an unusual charge, rarely brought by the IRS. If the IRS files charges under 26 U.S.C. § 7206, a taxpayer needs to be represented by a Forth Worth criminal tax lawyer who truly understands the elements and defenses. Attorney Lawrence Brown has 25 years of experience in tax litigation and white collar defense. He previously worked for the Department of Justice Tax Division as a trial lawyer, an experience that gives him valuable inside perspective of tax prosecution. He is a strong advocate who considers the immediate and long-term implications of an arrest and conviction for concealment.

Penalties for Removal or Concealment

Removal or concealment with intent to defraud is a serious felony. Conviction could result in fines of up to $250,000 for individuals and $500,000 for corporations, in addition to tax liability on the property, interests and penalties. In cases in which the taxpayer’s evasive actions benefited the taxpayer financially or resulted in losses to another person, the taxpayer may be fined double the resulting gross gain or gross loss. Individuals also face up to three years in prison.

Beyond the criminal penalties, a taxpayer may be assessed unanticipated taxes on property, liability that can add up to hundreds of thousands of dollars. This complication can be devastating to a client who truly believed the property was not taxable. A tax lawyer in our Forth Worth offices is experienced in both civil and criminal tax litigation and can successfully fight the tax assessment as well as the criminal charges.

What is Removal and Concealment?

In a nutshell, removal or concealment is the taxpayer’s attempt to hide assets from the IRS to defeat levy or payment of taxes. To convict, the government must prove beyond a reasonable doubt:

  • The taxpayer removed, deposited or concealed goods, or is concerned in doing so.
  • The goods were taxable or taxes have already been levied on them.
  • The taxpayer intended to evade or defeat the assessment or collection of taxes by concealing the goods.

What Does Removal, Deposit and Concealment Mean?

This broad statute applies beyond persons who remove, deposit or conceal goods to persons who are concerned in taking those actions. Furthermore, the government need not prove the taxpayer physically concealed the property. Instead, the government may allege the taxpayer engaged in accounting or title transfer that effectively concealed ownership or value of the goods from the IRS.

The word “or” is important here. The government must prove only one of the acts, either removal, deposit or concealment, not that all of them occurred.

Timing of the Removal or Concealment

The taxpayer is prohibited from removing or concealing assets to avoid taxes being imposed or collected. The timing of the taxpayer’s actions is relevant to which provision is being charged. If the government has accused the taxpayer of taking evasive actions to avoid imposition of a tax levy, the taxpayer may have taken the prohibited actions at any point before the taxes are due.

If the taxpayer is instead accused of avoiding paying taxes that have already been authorized, the courts are conflicted. At least one court has determined that the statute applied only to the taxpayer’s actions taken after the IRS assessed the tax, demanded payment and gave notice, and upon the taxpayer’s refusal to pay.

Concealment of assets before levy assessment does not necessarily let the taxpayer off the hook, however. Instead, the violation may satisfy elements of a different provision of the code, such as the attempt to evade or defeat under §7201. When reviewing a tax violation, our attorneys always consider other charges the government may bring so we can incorporate that possibility in our defense tactics. In other words, although we would argue that the government has failed to meet its burden of proof required for the §7206 charges, our responses would be carefully worded to protect our clients from being charged with a separate violation.

Willfulness of the Taxpayer’s Actions

Nowhere in §7206 is the word “willful” used, and so the government does need to show willful conduct to prevail on these charges. However, the government must show beyond a reasonable doubt that the taxpayer intended to avoid tax liability or payments by removing or concealing goods.

The prosecution may use the same types of evidence to establish intent to defraud as to prove the taxpayer’s affirmative act to evade assessment or collection. The government may use circumstantial evidence to show the taxpayer’s state of mind in performing the prohibited acts.

Our law firm effectively counters evidence of intention offered by the government. We may show that our client’s actions were done in error or independently of tax concerns. For example, we have argued that our client transferred property to another for a reasonable business purpose, not to avoid taxation.

Protect Your Rights With the Assistance of a Fort Worth Criminal Tax Lawyer

With so much to lose, you need experienced counsel to protect your rights in a tax fraud investigation. Consult with a Fort Worth criminal tax lawyer at Brown, PC to develop a successful defense strategy.

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