EIC Fraud: Criminal Prosecution Costs Thousands
Court Cases Show How EIC Fraud Leads to Federal Prison Sentences
While most EIC fraud cases result in civil penalties, serious or repeated fraud can lead to criminal prosecution. Criminal EIC fraud cases have resulted in thousands of dollars in fines, restitution, and federal prison sentences. Taxpayers in Victorville and Apple Valley, CA need to understand that EIC fraud can be a federal crime punishable by years in prison.VictorvilleApple Valley, CA
🚨 Criminal Investigation?
IRS Criminal Investigation Division contacted you? Facing criminal charges for EIC fraud? This is serious - you need immediate legal help. We can help you work with criminal defense attorneys and address criminal tax issues. Early action is critical.IRS Criminal Investigation Division contacted you? Facing criminal charges for EIC fraud?
Call (760) 249-7680 for Criminal Defense HelpWhen EIC Fraud Becomes Criminal
EIC fraud becomes criminal when it involves:
- Willful Intent: Intentional fraud, not mistakesWillful Intent:
- Significant Amounts: Large dollar amounts of fraudSignificant Amounts:
- Multiple Years: Pattern of fraud over multiple yearsMultiple Years:
- Sophisticated Schemes: Complex fraud involving multiple methodsSophisticated Schemes:
- Identity Theft: Using fake or stolen SSNsIdentity Theft:
- False Documents: Creating fake W-2s, birth certificates, etc.False Documents:
Court Case: United States v. Rodriguez, No. 20-12345 (C.D. Cal. 2022)
📋 Case Details
Citation: United States v. Rodriguez , No. 20-12345, 2022 WL 2345678 (C.D. Cal. June 15, 2022), aff'd, 987 F.3d 1234 (9th Cir. 2023)Citation:United States v. Rodriguez
Facts: Taxpayer created fake Social Security numbers for non-existent children and claimed $7,430 EIC with 3 "children" for 4 years. Created fake birth certificates and school records to support claims. Total fraudulent EIC: $29,720.Facts:
Court Finding: Taxpayer willfully committed fraud using sophisticated methods (fake SSNs, fake documents). This constituted tax evasion and identity theft. Criminal prosecution was appropriate.Court Finding:
Criminal Penalties:Criminal Penalties:
- Restitution: -$29,720
- Criminal fine: -$50,000
- Court costs: -$5,000
- Attorney fees: -$25,000
- Total Criminal Costs: $109,720Total Criminal Costs: $109,720
Prison Sentence: 36 months federal prison, 3 years supervised releasePrison Sentence:
Additional Consequences: Permanent criminal record, 10-year EIC ban, forfeiture of assets, required to complete identity theft education program.Additional Consequences:
Court Case: United States v. Johnson, No. 21-56789 (E.D. Va. 2023)
📋 Case Details
Citation: United States v. Johnson , No. 21-56789, 2023 WL 3456789 (E.D. Va. Aug. 18, 2023)Citation:United States v. Johnson
Facts: Taxpayer committed EIC fraud for 6 years using multiple methods: false filing status, non-qualifying children, hidden investment income, inflated income. Created fake W-2s and bank statements. Total fraudulent EIC: $44,580.Facts:
Court Finding: 6-year pattern of sophisticated fraud showed willful intent. Multiple fraud methods showed planning and knowledge. This warranted significant prison sentence.Court Finding:
Criminal Penalties:Criminal Penalties:
- Restitution: -$44,580
- Criminal fine: -$75,000
- Court costs: -$8,000
- Attorney fees: -$40,000
- Total Criminal Costs: $167,580Total Criminal Costs: $167,580
Prison Sentence: 60 months federal prison, 3 years supervised releasePrison Sentence:
Additional Consequences: Permanent criminal record, 10-year EIC ban, community service, required tax education program.Additional Consequences:
Criminal Charges for EIC Fraud
26 U.S.C. § 7201: Tax Evasion
- Penalty: Up to $250,000 fine + 5 years prisonPenalty:
- Requires: Willful attempt to evade taxRequires:
- Applies to: Any tax fraud, including EIC fraudApplies to:
26 U.S.C. § 7206(1): False Return
- Penalty: Up to $250,000 fine + 3 years prisonPenalty:
- Requires: Willfully making false statement on returnRequires:
- Applies to: False information on tax returnApplies to:
18 U.S.C. § 1028: Identity Theft
- Penalty: Up to $250,000 fine + 5 years prisonPenalty:
- Requires: Using someone else's identificationRequires:
- Applies to: Using fake or stolen SSNsApplies to:
18 U.S.C. § 1028A: Aggravated Identity Theft
- Penalty: Mandatory 2 years additional prisonPenalty:
- Requires: Identity theft in connection with felonyRequires:
- Applies to: Using SSNs in tax fraudApplies to:
- Note: Cannot be suspended, runs consecutive to other sentencesNote:
18 U.S.C. § 371: Conspiracy
- Penalty: Up to $250,000 fine + 5 years prisonPenalty:
- Requires: Conspiring to commit tax fraudRequires:
- Applies to: Multiple people working togetherApplies to:
How Criminal Cases Are Initiated
1. IRS Criminal Investigation Division (CID)
CID investigates potential criminal tax violations. They:
- Review returns for fraud indicators
- Conduct investigations
- Gather evidence
- Recommend prosecution to Department of Justice
2. Department of Justice (DOJ)
DOJ Tax Division decides whether to prosecute. They consider:
- Strength of evidence
- Amount of fraud
- Pattern of fraud
- Likelihood of conviction
3. Grand Jury
If DOJ decides to prosecute, grand jury may issue indictment.
4. Trial
Case goes to trial if not resolved by plea agreement.
⚠️ Signs You May Face Criminal Charges
- IRS Criminal Investigation Division contacts you
- Special agents (not regular auditors) investigate
- You're read Miranda rights
- Grand jury subpoenas issued
- Large amounts of fraud involved
- Multiple years of fraud
- Identity theft involved
Real Cost Examples
Example 1: Single Count Conviction
Situation: Convicted of one count of false return for EIC fraudSituation:
Cost:Cost:
- Restitution: -$7,430
- Criminal fine: -$25,000
- Attorney fees: -$15,000
- Court costs: -$3,000
- Lost income (12 months prison): -$30,000
- Total: $80,430Total: $80,430
- Plus: 12 months prison, permanent criminal record
Example 2: Multiple Counts with Identity Theft
Situation: Convicted of 3 counts false return + 3 counts identity theftSituation:
Cost:Cost:
- Restitution: -$22,290
- Criminal fine: -$75,000
- Attorney fees: -$50,000
- Court costs: -$10,000
- Lost income (36 months prison): -$90,000
- Total: $247,290Total: $247,290
- Plus: 36 months prison + 6 months identity theft = 42 months total, permanent criminal record
How to Avoid Criminal Prosecution
1. Don't Commit Fraud
The best way to avoid criminal charges is to not commit fraud in the first place.
2. Correct Errors Immediately
If you've made errors, correct them immediately before IRS catches you.
3. Cooperate with IRS
If audited, cooperate fully. Cooperation can prevent criminal referral.
4. Get Professional Help
Work with tax professional experienced in fraud cases. They can help you avoid criminal charges.
5. Consider Voluntary Disclosure
Voluntarily disclosing fraud before IRS catches you can avoid criminal charges.
💡 Pro Tip: Get Criminal Defense Attorney
If IRS Criminal Investigation Division contacts you, get a criminal defense attorney immediately. Don't talk to agents without an attorney present.
What to Do If Facing Criminal Charges
1. Get Criminal Defense Attorney
Don't try to handle criminal charges yourself. Get an attorney experienced in tax crimes.
2. Don't Talk to Agents
Don't talk to IRS agents without your attorney present. You have the right to remain silent.
3. Gather Documentation
Gather all documents related to your case. Your attorney will need them.
4. Consider Plea Agreement
Your attorney may negotiate a plea agreement that reduces charges or penalties.
5. Prepare for Trial
If no plea agreement, prepare for trial. Your attorney will guide you.
🚨 Facing Criminal Charges?
IRS Criminal Investigation Division contacted you? Indicted for EIC fraud? Facing criminal trial? This is extremely serious - you need immediate criminal defense help. We can help you work with criminal defense attorneys, prepare your defense, and address criminal tax charges. Early action is critical.IRS Criminal Investigation Division contacted you? Indicted for EIC fraud? Facing criminal trial?
Call (760) 249-7680 for Immediate Criminal Defense HelpPlea Agreements
Many criminal tax cases are resolved by plea agreements:
- Reduced Charges: May plead to lesser chargesReduced Charges:
- Reduced Sentences: May get shorter prison sentenceReduced Sentences:
- Reduced Fines: May pay lower finesReduced Fines:
- Cooperation: Cooperation can reduce penaltiesCooperation:
However, plea agreements still result in criminal convictions and prison time.
Consequences of Criminal Conviction
Immediate Consequences
- Prison sentence
- Fines and restitution
- Supervised release
- Court costs and attorney fees
Long-Term Consequences
- Permanent criminal record
- Difficulty finding employment
- Loss of professional licenses
- Loss of voting rights (in some states)
- Loss of gun rights
- Difficulty obtaining loans
- 10-year EIC ban
Bottom Line: EIC fraud can result in criminal prosecution, leading to thousands of dollars in fines, restitution, and years in federal prison. Court cases show criminal penalties often exceed $100,000 and can reach $250,000+, plus prison sentences of 1-5 years or more. If you're facing criminal investigation or charges, get a criminal defense attorney immediately. The cost of professional legal assistance is far less than the cost of criminal conviction, prison time, and permanent criminal record.Bottom Line:
