Major Mistakes – 5 Steps To Take If You’re Being Investigated For Tax Fraud

tax fraud passive-income
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Executive Chronicles | Major Mistakes – 5 Steps To Take If You’re Being Investigated For Tax Fraud | Being investigated for tax evasion is one of the most daunting experiences you can face in the modern world. You’ll likely roll rapidly from one emotion to the next, feeling fear, frustration, anger, and panic. This is all perfectly normal, and there’s power in sitting with these emotions. 

The one thing you shouldn’t do is act rashly in an emotional state. This could lead you to decisions that worsen your situation. Instead, work through the following five steps:

1. Engage a competent legal representative

Depending on the seriousness of the charges, you may need to find a criminal defense lawyer who specializes in tax fraud. At the very least, you want a trained professional who has a track record of success in tax-related issues. Not only will this give you the best chance of getting a positive outcome, but it will also put your mind at ease, making every other step in the process easier to get through. 

2. Budget for your expenses

It’s important to be aware that this situation could get expensive. With this in mind, it’s important to ensure your lawyer is upfront with you about what kind of expenses you’re likely to be looking at. From here, you need to create a budget that will allow you to cover your costs. If your financial situation is looking dire, it may be worth seeking out debt solutions from a reputable non-profit organization. 

3. Gather as much evidence as you can

The more information you’re able to provide, the more likely it will be that you can prove you took reasonable steps to avoid being party to tax fraud. Your attorney will have their work cut out in determining all the details of your situation, so arming them with knowledge in the form of evidence is the best thing you can do. Collect receipts, tax files from previous years, communications between you and your tax accountant, and anything else that may be relevant. You never know which piece of information could be crucial to achieving a favorable outcome.

4. Stick to the plan you develop with your lawyer

You’ll have many meetings with your attorney, and you should walk away from each one with a clear plan and an understanding of what you need to do before you meet again. It’s important that you stick to what you agreed upon, rather than allowing your emotions to intercede and lead you into rash decisions. If in doubt, don’t be afraid to pick up the phone and run any ideas you’ve had by your lawyer. 

5. Invest in training and due diligence

In addition to dealing with your present situation, it’s important that you take steps to ensure this never happens again. If you’re running a business, this will mean providing training to your staff so that everyone is clear on what they must do to ensure they’re complying with taxation rules. It’s equally important to ensure you and your staff know how to conduct due diligence checks so that you can avoid doing business with anyone who might be involved in tax fraud. 

The last thing anyone wants to hear is that they’re being investigated for tax fraud. However, there are steps you can take to reduce the stress of the situation and work towards a positive outcome. Start with the tips listed above, and be sure to take care of your mental health throughout the process.