Most of us in Sacramento would agree that our business and income taxes should be paid on time and in full. Of course, situations can make doing so undesirable or impossible. There is a point, however, when failing to pay your taxes can lead to federal tax evasion charges.

WHAT CONSTITUTES TAX EVASION?

Tax evasion occurs when a person or entity purposely avoids paying taxes or underpays what they owe. This can lead to criminal charges and significant penalties. Tax evasion is a federal crime per the IRS tax code. Ultimately, to prove tax evasion, it must be shown that there is an unpaid tax liability, the taxpayer took affirmative action to evade the tax, and the taxpayer specifically intended to evade their known legal duty to pay.

HOW DOES THE IRS DETERMINE WHETHER TAX EVASION HAS OCCURRED?

Proving tax evasion can be difficult. When investigating allegations of tax evasion, the IRS will:

• Examine forms: Tax evasion can be proven even if no tax forms are sent to the IRS because the IRS receives information from other parties, such as a W-2 from the taxpayer’s employer or a 1099 if the taxpayer is self-employed. The key is that the failure to pay what is owed in taxes was done with intent.
• Review finances: The IRS will review the taxpayer’s finances to determine if fraud or the concealment of income is present. (If a bank asks their account holder to terminate their banking relationship, it is likely that a subpoena has been served on the bank to review the account holder’s records. This is a clue that a federal investigation is underway.)
• Look for hidden income: The failure to report work done for cash can also be an act of tax evasion. For the self-employed and for businesses, misrepresenting or hiding from the IRS the amounts of receipts, sources of income, revenue, and profits may also constitute tax evasion.

PENALTIES FOR TAX EVASION

Taxpayers found guilty of tax evasion will have to pay what they owe in taxes, interest, and penalties, and may receive a prison sentence. Fortunately, if you are accused of tax evasion or other tax crimes, legal help is available to help you navigate your defense options and fight for an appropriate outcome.

Many people end up facing white-collar criminal charges and criminal convictions because they don’t understand the law. They consent to a search of their person or vehicle when they shouldn’t, and they sometimes offer information to the police that is subsequently used against them in court. This is why it’s crucial that you understand your legal rights and how to use them to protect yourself from overzealous police officers and prosecutors. One of those rights is the right to remain silent.

WHEN DOES YOUR RIGHT TO REMAIN SILENT KICK IN?

Your right to remain silent follows you around. A specific event doesn’t trigger it. However, it can be waived once you begin cooperating with the authorities. Therefore, anytime that the police start to question you, you can refrain from answering their questions, saying only that you reserve your right to remain silent and wish to speak to a lawyer. In fact, in many instances, this is the best way to protect yourself.

WHERE PEOPLE GET TRIPPED UP

A lot of accused individuals end up talking to the police because they don’t realize that they have the right to remain silent. They expect that police officers will read them their Miranda warning before asking questions, the answers to which will be used against them. However, the police must only inform you of your right to remain silent if you’re subjected to custodial interrogation.

One way to determine if you’re being interrogated is to simply ask if you’re free to leave. If you are, then you can and probably should go. If you’re not, you should read your rights and ask for an attorney. Once you do so, the questioning should stop. So, beware of police officers who try to buddy up to you to get you to talk outside the confines of custodial interrogation.

AGGRESSIVELY DEFEND YOURSELF AGAINST CRIMINAL CONVICTION

A criminal conviction can wreak havoc on your life. But you don’t have to sit back and let the prosecution run the show. Instead, you can diligently work to build the criminal defense strategy that is right for you, which includes assessing whether evidence was illegally obtained from you, such as by interrogating you without reading you your rights. If you’d like to learn more about what you can do to craft compelling criminal defense arguments, then now may be the time to reach out to a legal professional with a track record of success in this area of the law.

If you’ve been following the news lately, then you probably heard about the trial of Theranos founder Elizabeth Holmes. Holmes was a Silicon Valley star who quickly became a billionaire after developing what many thought would be revolutionizing technology to reshape the blood-testing industry. However, she quickly fell from grace once investors and investigators discovered that the technology used by Theranos was ineffective, and Holmes appeared to have lied to investors and patients about its success.

Now Holmes has been found guilty on multiple counts of fraud, and many startup business owners are worried about what this case means for them. So, what can we learn from the Theranos case?

Words matter

First, you have to be careful with what you say, especially when dealing with potential financial transactions. It’s one thing to say that you hope your business will do something in the future, but it’s completely different to claim that your business is already achieving that goal. That’s the crux of Holmes’s conviction in the Theranos case: she told investors that the technology worked to secure money when the technology, in fact, did not work.

Find third-party support

To avoid the appearance of making false claims, have third-party evidence to back up your position. This may be other witnesses, sure, but it’s most beneficial to have some concrete scientific or financial documentation that you can point to to support your claims.

Choose investors wisely

As you’re starting a business, taking money from anywhere you can get is easy. But you should try to secure investments from those familiar with your business’s line of work. That way, they can help ensure that you’re remaining in compliance with applicable regulations and can ask pertinent questions that may, in the long run, keep you out of trouble.

TURN TO A LEGAL PROFESSIONAL WHEN ACCUSATIONS ARE MADE.

So, while you’ll want to do as much as you can on the front end to protect yourself from allegations of criminal wrongdoing, you’ll also want to be prepared to defend yourself in the event that you’re accused of breaking the law. Fortunately, there are strong criminal defense attorneys out there who can help you navigate the intricacies of your white collar crime case and fight to secure the just outcome that you deserve.

If you have reason to believe you are under investigation by law enforcement officials, the actions you take going forward are of profound importance to your future. The first thing you should do is talk to a lawyer. A few mistakes you should avoid include:

Talking to investigators without an attorney

You may have nothing to hide and feel that talking freely to investigators will reveal your innocence, but this can be a severe mistake. Investigators with the FBI, IRS, and other government agencies are skilled at getting subjects to make incriminating statements. A barrage of questions can disorient an innocent person and compel them to make contradictory and untrue statements, resulting in heightened scrutiny and even possible criminal charges. You can avoid these pitfalls by having a knowledgeable attorney from the beginning.

Keeping your attorney in the dark

Speaking of your attorney, this is the person with whom you should be completely forthright, even if it means revealing embarrassing or even incriminating details. The attorney-client privilege offers you the freedom to divulge sensitive information to your lawyer with the assurance that your communications will remain confidential.
The last person you want to be surprised by an unknown element in your case is your lawyer. The more information your attorney has at hand, the better equipped she will be to help you avoid lasting damage from a criminal investigation.

Dragging your feet

Every hour and minute counts in a high-stakes legal matter such as a criminal investigation. If you are just finding out federal investigators have you on their radar, likely, the investigation has already been active for weeks or even months.
The sooner you mount a proactive defense, the better chance you have of quickly putting this matter behind you, or at least mitigating the impact that a criminal investigation will have on your career and your life.

Insider trading is a term that most often appears in news stories about company executives going to prison and losing everything. However, contrary to what most members of the general public may believe, insider trading isn’t always illegal. There is a perfectly legal way of doing it, and thousands of people across the country do it every single day. Here’s what you should know in order to avoid inadvertently violating the law.

What is insider trading?

Insider trading simply refers to the act of buying or selling stock in one’s own company. For example, when Elon Musk – the CEO of SpaceX – purchases SpaceX stocks, that counts as insider trading.

You don’t have to be a CEO to engage in insider trading. The Securities and Exchange Commission (SEC) – the federal agency investigating financial crimes such as illegal insider trading – has a specific definition of “insider.” An insider is any corporate officer, director or anyone with 10% or more ownership of a company.

What can make insider trading illegal?

You can make an insider trade that violates United States securities law in two ways. The first way is to fail to satisfy the reporting requirements.
The SEC requires all insiders who trade their own company’s stock to file a report of the trade. That way, they can track the trades and ensure that nothing illegal has occurred. Failure to report your trades could trigger an investigation and land you in hot water with the SEC.

The second way your insider trade can be illegal is if you make the trade based on nonpublic, inside information. In other words, you're fine if you decide to sell your company’s stock based on information that anyone in the public could access. But your sale may be illegal if you sell based on information you received from a private company meeting or memo.

An important thing to note is that you can violate the law even if you’re not the one making the purchase or sale of stock: If you leak nonpublic information about your company to someone else, and they then trade on that information, you can get into trouble. That’s why you must be very careful about what you disclose regarding your company’s sensitive internal information (even to family members and close friends).

Securities law involves complex and ever-changing rules. It’s best to stay on top of the current legal requirements for stock trades so that you don’t accidentally do something that could give rise to an SEC or Department of Justice investigation. If you are already under investigation, it is imperative that you consult with an attorney as soon as possible who can advise you on how to respond.

Many business owners are hoping for more government relief in 2021 due to the ongoing coronavirus pandemic and resulting economic downturn. However, the Small Business Administration is concerned about potential fraud in the second round of the Paycheck Protection Program (PPP) loans. Last year, the SBA reports that 57,000 potentially ineligible borrowers received $3.6 billion from the PPP program last year.

Government bringing charges against business owners

Hundreds of business owners now face federal fraud charges for receiving Paycheck Protection loans. The SBA is concerned PPP fraud may become a bigger problem in the second round of the government program since the process of applying for PPP loans has become more accessible. The government is determined to crack down on businesses that don’t use their PPP funds to sustain employee wages.

Federal officials want to set an example, which may lead to more prosecutions of those who may have committed PPP fraud. The government also wants to deter other businesses from committing fraud through this program.

When facing a fraud investigation or charges

If you receive notice your business is facing fraud charges or a fraud investigation related to PPP loans, you need to consult with an experienced federal white-collar criminal defense attorney as soon as possible. You may have unintentionally violated PPP rules.

With an attorney’s help, you can gather evidence to show how your business used PPP funds. Your attorney also can help negotiate a resolution to this matter.
You don’t want to jeopardize your business when facing fraud a PPP investigation or federal charges. Working closely with a defense attorney can help you reach the best outcome possible and keep you and your business from suffering further.