An Overview of North Carolina Tax Fraud Crimes

Individuals and businesses in North Carolina are required to pay federal and state taxes. The federal and state government use this money to pay for essential public services such as infrastructure projects, schools, court systems, and more. Because this revenue is so important to keep the state and country running, taxing authorities take tax evasion and fraud very seriously. Here, we give an overview of North Carolina tax fraud crimes and discuss the potential consequences.  

What Is Tax Fraud?

Tax fraud is the willful attempt to evade income tax laws or defraud a tax collecting agency. Essentially, it means that a person has intentionally tried to avoid paying the taxes that he owes. For anyone who has paid taxes in the past (which is most of us), the idea of tax fraud might sound scary. Tax laws are extremely complicated – how can we be sure that we are doing everything right and not running afoul of the laws? 

Fortunately, both the IRS and state tax authorities understand that mistakes will be made. So long as those mistakes are genuine and not willful or fraudulent, the case will be treated as negligence and resolved through payment of the taxes owed and, possibly, a fine. The government is most interested in cases where there is fraudulent activity, which includes overstating deductions and exceptions, underreporting income, falsifying documents, claiming personal expenses as business expenses, and claiming exemptions that should not be claimed.   

Federal vs. State Tax Fraud Crimes and Punishment

Anyone suspected of tax fraud might face prosecution and penalties by both the U.S. government and the state of North Carolina. In general, the IRS will seek to collect any taxes owed and punish a person with possible imprisonment. North Carolina (like most states) will generally punish a person financially through the payment of fines. 

North Carolina Tax Fraud Crimes and Punishment  

Below are common tax fraud crimes, ranging from relatively minor (failure to file a return) to more serious (fraud), to the most serious (evasion), along with the punishment a person may face if convicted of these crimes in North Carolina: 

  • Failure to File Return: 
    • The penalty for failing to file a return on the date it is due is 5% monthly, up to a maximum amount of 25% of the total tax owed.
    • You might be exempt from this penalty if you have paid at least 90% of the taxes owed, however, the state might penalize you with a late payment penalty on the 10% not paid.
    • The state might also charge you with a 20% penalty on any tax, penalty, and interest not paid within ninety days after the debt becomes collectible.
  • Fraud: if the State discovers a deficiency or delinquency in payment because of fraud, the punishment is 50% of the total unpaid tax bill.  
  • Attempt to Evade or Defeat Tax: a person who willfully attempts to evade or defeat a tax or payment will not only be fined but may face charges of a Class H felony. 

Consult a North Carolina Criminal Defense Attorney Today 

Both federal and North Carolina tax fraud charges should be taken very seriously. If you are facing charges in North Carolina, contact Cotten Law. Jeremy has represented tens of thousands of clients and has hundreds of stellar reviewsonline. Our offices serve clients in central North Carolina including Wake, Johnston, Harnett, Orange, Sampson, Lee, and Chatham Counties. 

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