What is Tax Fraud?

There are two certainties in life: death and taxes. Although none of us enjoy paying our taxes, some people attempt to defraud the government by providing false information or failing to include all the income that they earned during the year. This is tax fraud.

If you attempt to defraud the government, in addition to being penalized by the Georgia Department of Revenue, you could also be facing federal charges.

If you have been accused of tax fraud, our Cumming white-collar crime defense lawyers are here to provide legal counsel to defend these allegations against you.

How Does Georgia Law Define Tax Fraud?

Tax fraud is an individual or business’s attempt to falsify information on a tax return to avoid paying taxes. Under Georgia Code §48-1-6, tax fraud is defined as:

  • Filing any tax return or refund claim containing false information knowing that the information has been falsified
  • Knowingly and intentionally leaving out any information in a document, creating a material misstatement or misrepresenting a fact, or
  • Using any trick, scheme, or plan to avoid paying taxes, penalties, or interest to the government

Types of Tax Fraud and Penalties in Georgia

Many times, when a person omits relevant information on a return, this false representation is significant in reducing their tax liability.

Georgia Department of Revenue (DOR) recognizes the following types of tax fraud:

Fraudulent Underpayment

Whether your underpayment was to intentionally defraud the government or because of negligence, you will face harsh penalties. A fraudulent underpayment is penalized at 50% of the underpayment of tax due, while a negligent underpayment is penalized at 5% of the tax due.

Frivolous Return

If your tax return leaves out information to determine the amount of taxes you owe or the information provided is inaccurate, this is known as a frivolous return. Taxpayers may do this in a way to “stick it to the government,” but if you are caught, it comes with a penalty of $1,000.

Failure to Pay Estimated Tax

Whether you are a business or an individual who is self-employed, if taxes are not being withheld from your income, you will need to make estimated payments throughout the year. Failure to do so can result in steep penalties, with individuals having to pay 9% per year of the total underpayment and businesses having to pay an additional 5% of Georgia income tax on top of 9% of the underpayment for the year.

Failure to Withhold Employee Taxes

When an employer fails to withhold taxes on behalf of an employee, this makes the employer liable for any taxes that are not paid. An employer can be fined for each employee for which taxes were not withheld. An employer who fails to withhold employee taxes will be subject to a $10 fine for each tax quarter.

Fraudulent Withholding Receipt (Form W-2)

Employers are required to provide employees with a withholding receipt (form W-2) to use when filing their tax returns. A copy of the W-2 is also provided to the Georgia DOR. Supplying an inaccurate or fraudulent W-2 is another form of tax fraud, with employers being fined $50 per fraudulent receipt.

False or Fraudulent Sales & Use Tax Return

Retailers are required to report sales tax on tangible personal property and some services. Items bought out-of-state and then used in Georgia are subject to a use tax. Anyone who is found to be inaccurately reporting sales or use tax will be subject to a fine of $5,000, up to one year in prison, or both. Any subsequent violations are a felony, punishable by up to $10,000, a maximum of five years in prison, or both.

Accused of Tax Fraud? Consult with a Cumming White Collar Defense Lawyer Today

Being charged with tax fraud is a serious matter that will not simply disappear. A tax fraud charge can have the federal and state governments breathing down your neck, costing you thousands of dollars in fines and potential imprisonment.

If you are dealing with tax fraud allegations, we are here to help. Contact us online or by calling 866-399-5015 to schedule your initial consultation.