Under certain circumstances, the IRS and SEC/CFTC whistleblower programs allow whistleblowers to proceed without an attorney. However, beacuse there are important considerations when deciding how to proceed, it is advisable to contact an experienced whistleblower attorney.
The civil and criminal penalties for corporate tax fraud can be severe. Civil penalties assessed can equal 75% of the total value of taxes underpaid as a result of the fraud. Civil penalties can also be assessed for instances of underpayment that do not constitute fraud.
The burden of proof for criminal tax fraud is much stricter. The IRS must prove their case beyond a reasonable doubt. A corporation is generally held liable in a criminal case when the fraudulent acts are committed in an official capacity, are to the benefit of the corporation, and are authorized by the corporation.
Criminal penalties may be imposed in addition to civil penalties. The criminal penalties vary based on the amount of tax at issue. Under federal sentencing guidelines, the higher the amount of tax evaded, the greater the period of incarceration.
Proving Corporate Tax Fraud
Corporate tax fraud can be very difficult to prove. The Omnibus Budget Reconciliation Act (1989) requires the IRS to clearly prove guilt on the part of a corporation when tax fraud is carried out by its employees. The IRS must present convincing evidence that:
Mere suspicion of corporate tax fraud will not be sufficient to secure a conviction, nor will a preponderance of the evidence. The courts will generally consider the following evidence as proof of corporate tax fraud:
Fraudulent Actions on the Part of an Individual
Under special circumstances, the actions of one person from the corporation may result in the entire corporation being held liable for tax fraud if:
Since there are only rare circumstances where a corporation will be deemed the alter ego of an individual corporate agent, the majority of corporate tax fraud cases involve the second criteria listed above. However, in many cases, a whole will not be held accountable for the actions of an individual corporate agent. If the corporation was the innocent victim of unauthorized activities by a shareholder or employee and these actions went against the interests of the corporation, it will generally not be found guilty of tax fraud.