New York Tax Law § 1806: Criminal Tax Fraud in the First Degree

Criminal tax fraud in the first degree is a class B felony. Just line with criminal tax fraud in the second, third, fourth, or fifth degree, to face a charge of criminal tax fraud in the first degree, you have:

• Filed a false return: This involves filing a tax return that contains false or fraudulent information with the intention of avoiding paying taxes.
• Failed to file a return: This involves willfully failing to file a tax return with the intention of avoiding paying taxes.
• Failed to remit taxes: This involves collecting taxes from customers or employees but failing to remit those taxes to the government.
• Evaded taxes: This involves willfully failing to pay taxes.

What makes this charge different from the other criminal tax fraud charges, the amount of tax at issue must be greater than $1 million over a period of four years or less.

People v. Haruni, 80 A.D.3d 751 (2d Dept. 2011). In People v. Haruni, the defendant was charged with Criminal Tax Fraud in the First Degree under New York Tax Law § 1806. The prosecution alleged that the defendant, who owned and operated several jewelry stores, failed to report more than $4 million in sales and income over a period of several years, resulting in more than $1.5 million in tax liability.

At trial, the prosecution presented evidence of the defendant's income and his failure to report it on his tax returns. The prosecution also presented evidence of the defendant's use of cash transactions and unreported income to evade taxes. The defendant argued that he was not aware of his tax obligations and that he had relied on his accountant to handle his taxes. However, the jury rejected the defendant's arguments and found him guilty of Criminal Tax Fraud in the First Degree.

People v. Newell, 32 N.Y.3d 905 (2018). In People v. Newell, the defendant was charged with Criminal Tax Fraud in the First Degree under New York Tax Law § 1806. The prosecution alleged that the defendant, the former treasurer of a local labor union, embezzled more than $1 million in union funds and failed to report the embezzled funds as income on his tax returns, resulting in more than $300,000 in tax liability. At trial, the prosecution presented evidence of the defendant's embezzlement and his failure to report the embezzled funds on his tax returns. The prosecution also presented evidence of the defendant's lavish lifestyle, including purchases of luxury cars and a vacation home, which were funded with embezzled funds.

The defendant argued that he was not aware that the embezzled funds were taxable income and that he had relied on his accountant to handle his taxes. However, the jury rejected the defendant's arguments and found him guilty of Criminal Tax Fraud in the First Degree.

• Criminal tax fraud in the fifth degree. Section 1802
• Criminal tax fraud in the fourth degree. Section 1803
• Criminal tax fraud in the third degree. Section 1804
• Criminal tax fraud in the second degree. Section 1805

If found guilty of criminal tax fraud in the first degree, the individual may face a class B felony charge. The penalty for this offense may include imprisonment for up to 25 years and fines of up to $500,000 or double the amount of taxes evaded, whichever is greater.

A person commits criminal tax fraud in the first degree when he or she commits a tax fraud act or acts and, with the intent to evade any tax due under this chapter, or to defraud the state or any subdivision of the state, the person pays the state and/or a political subdivision of the state (whether by means of underpayment or receipt of refund or both), in a period of not more than one year in excess of one million dollars less than the tax liability that is due.  Criminal tax fraud in the first degree is a class B felony.

If you are arrested for Criminal Tax Fraud in the First Degree under New York Tax Law § 1806, it is important to immediately seek the assistance of an experienced criminal attorney serving new York. The penalties for this offense can be severe, including significant fines and prison time, and reputational damage. Contact Stephen Bilkis & Associates at 800.696.9529 to schedule a free, no obligation consultation regarding your case. We represent clients in the following locations: Manhattan, Nassau County, Queens, Bronx, Brooklyn, Long Island, Staten Island, Suffolk County, and Westchester County.