Tax Evasion in Arizona
A.R.S. § 42-1127: Taxation Criminal Violations
Introduction
Tax evasion and fraud is a common violation that is punished through the taxation title under Arizona Statute § 42-1127 and not the criminal code. This overarching section includes all tax violations that can be criminally punished. Tax violations that occur by an ordinary individual or corporation in the process of filing taxes are the most common violations. When filing tax returns, an individual must disclose all assets, provide a full accounting of all income, and be truthful in the filings and required documents.
Tax fraud or evasion can take various forms but the most common will be classified in one or more of the following ways:
- Failing to file a tax return or failing to pay any administered taxes;
- Using any false or fraudulent information or failing to disclose required information;
- Preparing or presenting any false or fraudulent document when filing; or
- Fraudulently signing or executing any license or required document when filing.
Common Examples of Tax Evasion
As seen, tax evasion can take a number of different forms. Some of the more common forms are exemplified by the following scenarios:
- Providing a lower annual income on a tax return filing in order to qualify for a lower bracket and receive more of a refund. With this, creating a fake W-2 form or falsifying an existing W-2 form to reflect a lower income is also punished.
- Completely failing to file a state tax return at all.
- Stealing another person’s identity by obtaining their personal information and filing a tax return in their name and claiming the refund.
- Creating fake charities or other organizations which they later put money into to lower tax responsibility and receive certain tax breaks.
- Using a trust to hide certain assets such as property or accounts to avoid owing taxes.
- Using offshore accounts outside of the U.S. to avoid having to pay taxes.
- Any other method that includes lying or using false information on the tax filing document, any supplement document, or other required forms.
Pandemic Opportunists
Throughout the COVID-19 outbreak, individuals have misused the vulnerability of society and the government as an opportunity to commit tax fraud. The Arizona Department of Revenue’s Criminal Investigation Unit released a news report that showed that in the year 2020, tax fraud has increased by 50% compared to the same time frame as last year with more than $10 million defrauded. These schemes include stealing identities of retired or deceased individuals to get tax refunds through fraudulent 1099-R forms and stealing identities of youth to get a refund. Extending the tax filing deadline to July 15th has given individuals more time to engage in this fraudulent activity which has most likely led to the increase in numbers. Also, the stimulus package from the government has created another opportunity to steal another’s identity by using their tax returns and claiming their stimulus payment.
The COVID-19 breakout in 2020 is just one example of how easy it is to capitalize on a vulnerable system. Opportunities to commit tax fraud are tempting due to the seemingly difficult nature to prove intent or lack of mistake. However, government agencies specifically designed to follow, identify, and prosecute those that commit tax fraud see these cases every day and know exactly what evidence is needed to convict someone. The knowledge that government agencies will relentlessly investigate a case to ensure prosecution is but one reason to deter individuals from committing tax fraud.
Uncommon Charges of Tax Evasion
There are many other ways to criminally violate the taxation statute under A.R.S. § 42-1127 that include specific and uncommon circumstances. These violations include: threatening or using force to wrongfully impede a state department employee in tax administration, bribing or wrongfully causing absence of an individual providing testimony or information in regards to a tax proceeding, or tampering with or fraudulently using a stamp or meter impression. Additionally, tax preparers can be charged with tax fraud if they do any of the listed items above or try to defraud an individual by using their identity or improperly creating higher tax returns to receive more money. Any device that suppresses taxes during a sale or falsifies electronic records of sale systems such as a “zapper” is prohibited and can be punished as well.
Tax Evasion and Fraud Schemes
When tax evasion or fraud charges are brought, it is not uncommon for the state to charge the individual with tax fraud scheme. Fraud schemes, found under Arizona Statute § 13-2310, is a broad charge that requires three things: (1) knowingly obtaining any benefit (2) by false or fraudulent pretenses, promises, or material omissions (3) pursuant to a scheme or artifice to defraud. A “scheme or artifice” is defined as some plan, device, or trick to perpetrate a fraud. So, when an individual plans or prepares a way to defraud a person or system by false or incorrect information and receives any benefit, whether financial, physical, or any other kind, they will be charged with fraud scheme. This is particularly concerning because while tax fraud can be classified as a class five felony or even a class one misdemeanor, fraud scheme is a class two felony, which carries harsher penalties. Additionally, if an individual defrauded more than $100,000 through the scheme, they may be charged with super fraud scheme with even more severe penalties.
Penalties
Tax fraud or evasion is punished as a class five felony; however, if this is an individual’s first-time violation of tax fraud, it may be designated a class one misdemeanor. This is important as a class one misdemeanor conviction avoids more severe fines, jail time, and a felony conviction on record. A class one misdemeanor carries a maximum time of six months in jail and up to $2,500 in fines for individuals and $20,000 for enterprises. A class five felony has a maximum punishment of 2.5 years in prison and up to $150,000 in fines for individuals and $1 million for enterprises.
It is also important to keep in mind that an individual can be charged with tax fraud by state and federal agencies. The federal government will pursue prosecution if the person is found to be defrauding the United States involving federal taxes. This is concerning because a conviction on federal charges includes up to five years in prison and fines of up to $250,000.
An important element of these charges require an individual to “knowingly” commit the fraud or fraud scheme. Usually, cases that involve lack of knowledge or mistake will not be criminally prosecuted but will be punished with a number of civil fines. Criminal cases are generally brought when there is evidence that can firmly show that a perpetrator knew the fraudulent activity they were committing. Because of this, it is highly useful to have someone that has prosecuted fraudulent crimes and activity before. Here at Gilbert Criminal Lawyer, the criminal law team, which includes former prosecutors, will be able to help you understand the charges against you and what evidence the State will use to try to prosecute you. With us, we will help navigate the legal system and present the best defense for your case.
Hiring an Experienced Criminal Attorney
Driving Under the Influence per Arizona Revised Statute ARS 28-1381 A1 means if a person is “impaired to the slightest degree to operate a motor vehicle safely due to the consumption of alcohol”, then they are Driving Under the Influence. In Arizona, a second charge of DUI can be added per Arizona Revised Statute ARS 28-1381 A2, if the person’s Blood Alcohol Concentration is a .08 or higher.
Hiring a experienced and locally based criminal attorney is an important step in the criminal process. A Gilbert criminal lawyer should be hired within the week following an arrest. A skilled criminal attorney should have specialized knowledge and access to the resources necessary to competently defend you and successfully fight your criminal charges.
The criminal defense attorneys at Gilbert Criminal Lawyer are dedicated to providing the highest-quality defense available to our clients. It all starts with your free case review, where you can get a better idea of the legal road ahead. Contact us today to schedule your complimentary and private consultation with our superior criminal lawyers.
