Tax Evasion: Crimes, Penalties and Defenses in Virginia

Willfully failing to file or making false statements in a tax return is a crime under Virginia law. Individuals who owe more than $1,000 can be prosecuted for a Class 1 misdemeanor, while corporate officers who engage in tax evasion can be prosecuted for a Class 6 felony. Defending against these charges requires an informed approach and strategic representation from an experienced Prince William County criminal defense attorney.

Individuals and businesses in Virginia are subject to the Commonwealth’s tax laws. All taxpayers must file an income tax return annually, and many have additional filing obligations.

Failure to file can have serious consequences. At a minimum, taxpayers who fail to file can face interest and penalties imposed by the Virginia Department of Taxation. But, in cases involving allegations of intentional tax evasion, taxpayers can also face criminal consequences—including fines and prison time.

When is Failure to File a Tax Return a Crime in Virginia?

Under Section 58.1-3916.1 of the Code of Virginia, failure to file a tax return is a crime when the failure is willful. In cases involving willful failure to file, taxpayers can be charged with a Class 3 misdemeanor if they owe $1,000 or less, and with a Class 1 misdemeanor if they owe more than $1,000.

When is Making a False Statement in a Tax Return a Crime in Virginia?

Making a false statement in a Virginia tax return is a crime when the false statement is made “with intent to defraud.” Here, too, taxpayers can be charged with a Class 3 misdemeanor if they owe $1,000 or less, and with a Class 1 misdemeanor if they owe more than $1,000. Additionally, under Section 58.1-452 of the Code of Virginia, corporate officers who make false statements on their company’s returns “with intent to evade the payment of . . . taxes” can be charged with a Class 6 felony.

What Are Virginia’s Penalties for Tax Evasion?

The penalties for tax evasion in Virginia depend on the degree of the crime charged. Generally, the potential penalties for tax evasion include:

• Class 3 Misdemeanor – Up to a $2,500 fine and 12 months in jail
• Class 1 Misdemeanor – Up to a $500 fine
• Class 6 Felony – Up to a $2,500 fine and 12 months in jail, or up to five years in prison

These are in addition to the penalties that apply to filing deficiencies and underpayments generally. Under Section 58.1-308 of the Code of Virginia, the Department of Taxation has the authority to charge up to a 100 percent penalty for any “understatement [that] is false or fraudulent with intent to evade . . . tax.” Delinquent taxpayers remain liable for the taxes they owe (plus interest) as well.

FAQs: Defending Against Allegations of Tax Evasion in Virginia

What are some potential defenses to tax evasion charges in Virginia?

In many cases, defending against criminal tax evasion charges in Virginia involves challenging prosecutors’ evidence of willfulness or intent. If you made an honest mistake, you may be liable for back taxes, interest, and civil penalties, but you do not deserve to be criminally prosecuted.

Of course, if you have met your filing and payment obligations (or your company’s filing and payment obligations), this can serve as a defense as well. The Department of Taxation makes mistakes, and if it has incorrectly accused you of underpaying your tax liability, you should not have to face any further consequences.

Procedural defenses can also apply in some cases. For example, if the statute of limitations has expired, prosecutors should not be able to pursue their case against you. Depending on the circumstances, other defenses may apply as well.

Do I need a criminal defense attorney if I have been accused of tax evasion in Virginia?

If you are facing tax evasion accusations in Virginia, we strongly recommend speaking with an experienced criminal defense attorney right away. As discussed above, these accusations can lead to serious criminal charges, and a conviction could lead to fines, jail (or prison) time, and other consequences.

What if I am under investigation for federal tax evasion in Virginia?

Tax evasion carries even greater penalties in federal cases. The U.S. Department of Justice (DOJ) can pursue multiple charges in tax evasion cases—all of which carry the potential for fines and prison time. For example, under 26 U.S.C. Section 7201, facing accusations of “willfully attempt[ing] in any manner to evade or defeat any [federal] tax” can result in up to a $100,000 fine ($500,000 for corporations) and up to five years of federal imprisonment.

How Stevens Caruso Can Help

Within our white collar defense practice, we provide experienced legal representation to clients facing tax evasion charges in Virginia. If you have been accused of underreporting your (or your company’s) tax liability, we can use our experience to help protect you by all means available. Once you engage our firm to handle your tax evasion case, we will:

• Conduct a thorough assessment of your risk and the defenses you have available
• Advise you regarding the options you have available based on the circumstances at hand
• Help you make informed decisions about how to respond to the government’s allegations
• Target an out-of-court resolution that avoids criminal prosecution if possible
• Fight to protect you in court if necessary

The sooner you contact us, the more we can do to help. We provide free initial consultations and are more than happy to help you understand your situation so you can feel confident deciding what to do next.

Schedule a Free Consultation with a Prince William County Criminal Defense Attorney

If you need experienced defense counsel to fight tax evasion allegations in Virginia, we strongly encourage you to get in touch. To speak with an experienced Prince William County criminal defense attorney in confidence, call 703-897-1777 or tell us how we can help online today.