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Can I be convicted of tax crimes for illegal gambling?

To truly understand this question, one must first understand the definition of tax evasion. The Internal Revenue Service is the primary federal agency tasked with enforcing tax crimes. Generally, taxpayers attempting to evade paying income taxes, either in an individual capacity or as a component of a corporate scheme, are culpable of tax crimes. As discussed in one of our previous blog posts, each of these instances carries penalties of up to five years in prison and fines of $250,000.

However, money earned while illegally gambling is not considered taxable income. Many people who have earned money this way attempt to hide those assets or conceal their origins as deriving from legal enterprises. Technically, that would not qualify as tax evasion but rather as money laundering, another white-collar crime.

Tax evasion is still a rather large issue for the federal government. By its own estimates, the U.S. lost out on about $345 billion in fiscal year 2007 as a result of misrepresentations, underreported income, inflation of deductibles from tax returns and other various means of squirreling away money from the government.

Florida residents who are concerned about tax crimes or other white-collar investigations should know that a federal conviction is a felony that carries severe penalties including long periods of incarceration and substantial fines.

It is also important to know that simply being under investigation or indictment is not the same as a conviction. Federal prosecutors still must prove each element of every crime charged against you. For example, they must not only demonstrate that you earned money illegally, but they must also show that you intended to conceal it for the purposes of avoiding paying taxes. An experienced white collar defense attorney will tell you that sometimes, the prosecution's obligation to prove the case against you beyond a reasonable doubt can be an extremely difficult undertaking.

Source: Cornell University Law School-Legal Information Institute, "Tax Evasion" Nov. 04, 2014

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Coral Gables Office

Frank A. Rubino, Esq.
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