From the Tax Law Offices of David W. Klasing - Can You Be Charged with Money Laundering and Tax Evasion at the Same Time?

IRVINE, Calif., Nov. 30, 2022 /PRNewswire/ -- Money laundering and tax evasion are separate criminal offenses that both involve fraud, deception, and money. These offenses are often done separately, and one need not be required to perform the other. However, certain circumstances may allow for both offenses to occur together, or at least as part of a single larger criminal scheme or enterprise.

In a very general sense, tax evasion involves using deception or fraud to avoid paying taxes or avoid paying the full extent of your true taxes. On the other hand, money laundering involves money earned from illegal activities and concealing its illicit origins by passing it through complicated banking systems and transfers to make tracing it difficult. A person could theoretically be charged with both crimes at the same if these crimes were both parts of a larger criminal plan.

If you face tax evasion and money laundering charges, you will be confronted with a whole host of life altering legal consequences. Depending on the extent of your alleged criminal actions and the amount of money involved, you could pay very costly fines and even go to prison. You can contact our California tax fraud defense attorneys and CPAs for help with your case. Call the Tax Law Offices of David W. Klasing at (800) 681-1295 for a legal consultation.

The crimes of tax evasion and money laundering do not necessarily have to be done together. In most cases, they are probably totally separate acts because their end goals are somewhat different. The goal of tax evasion is to defraud the government and not pay taxes, while the goal of money laundering is to hide the origins of illicitly earned money. However, it is possible that these two crimes can go hand-in-hand and a defendant could be charged with both at the same time.

A person could be charged with tax evasion and money laundering by earning money from illegal activities and then "washing" the money and filing fraudulent tax returns to avoid paying taxes on it. In such a case, the defendant not only commits money laundering but does so with the intent to avoid taxes and defraud the government. While this seems like a very niche and narrow form of criminal activity, it may not be as uncommon as you might think. People who earn income from illegal activities probably do not want to declare it as taxable income so they can hide their criminal actions from the government.

If you are facing an audit, eggshell audit, reverse eggshell audit or criminal tax investigation where charges for tax evasion and money laundering could be at issue, call our California tax fraud defense attorneys and CPAs for help. We can help you fight, or better yet avoid, criminal tax charges and or clear your name.

Money laundering and tax evasion are two completely different criminal offenses that happen to involve money. While they do bear some similarities, such as their financial nature, they are separate offenses that do not necessarily overlap.

Money laundering must involve money that was obtained through some illegal means. Typically, the money must be earned through a specified unlawful activity (SUA) with certain degrees of intent or knowledge. The money is then put through numerous transactions, often involving different banks and financial institutions, to create a very confusing and untraceable trail. By doing this, the money's illicit origins are difficult, if not impossible, to trace. Money laundering is different from tax evasion because it inherently involves another crime and does not necessarily involve taxes. The money must come from an SUA; if there is no SUA, meaning the money was earned legally, there can be no money laundering.

Tax evasion, on the other hand, does not require money obtained through unlawful activity. Instead, the money is often earned through legitimate means, but the taxpayer does not want to pay taxes on it. Tax evasion can be accomplished in a variety of ways, many of which are similar to channels used for money laundering. The purpose of tax evasion is to defraud the government and avoid paying taxes you otherwise owe.

One key difference between these two offenses is the source of the money in question. Money laundering requires the money to come from an SUA, while tax evasion can be performed with any money from any source. Money laundering must involve another underlying crime or offense, while tax evasion does not.

One other distinction is where the charges come from. The federal government usually brings charges dealing with federal taxation – i.e., tax evasion charges. If the money and SUA in the money laundering case did not cross state lines, you could face California state charges for the money laundering instead of federal charges.

For more information about these offenses, contact our California tax fraud defense Attorneys & CPAs.

Money laundering and tax evasion may occur separately but may also be two parts of a larger criminal scheme. For example, a person could earn money from an SUA and then avoid paying taxes on it, leading to charges for both crimes. The offenses actually can overlap in many ways as the channels used to launder the illicit money can also help hide the money from the government, making it easier to illegally dodge taxes.

These two crimes can go together in different ways too. Ordinarily, money laundering involves money that originates from an SUA. However, money laundering statutes contain provisions allowing the crime to be charged when money is transferred for the purpose of funding an SUA. The transfer of this money could also serve the dual purpose of disguising the source of the money and hiding it from tax collectors.

Money laundering and tax evasions are two very serious criminal offenses that carry rather stiff penalties. If you have been charged with either or both of these offenses, please get in touch with our dual licensed California tax fraud defense lawyers & CPAs.

A predicate crime is an offense required as part of the commission of a larger criminal plan or scheme. The predicate crime is a criminal offense in itself, but it is also a necessary step in a bigger crime operation. Tax evasion has traditionally not been considered a predicate offense for money laundering. However, other offenses may be involved in tax evasion that could be considered predicate offenses for money laundering.

Money laundering, as stated above, involves money that is obtained via an SUA. While evading your taxes is certainly unlawful, there are no violations of the Internal Revenue laws included among the list of SUAs in the Racketeering Influenced and Corrupt Organizations Act (RICO). However, even though tax fraud may not be a direct predicate offense for money laundering, other crimes like mail fraud or wire fraud commonly associated with tax evasion are direct predicate offenses.

Essentially, tax evasion is not a direct predicate offense for money laundering. However, other offenses involved in tax evasion may be direct predicate offenses, and you may end up being charged with money laundering. You should consult with an attorney if you believe you may be accused of a predicate offense for money laundering. Call our California tax fraud defense lawyers for help.

It is very possible that a defendant charged with money laundering could also be charged with tax evasion. While the crimes are independent of each other, they may work in tandem to accomplish a larger criminal goal. For help fighting your charges, contact our dual licensed California tax fraud defense attorneys & CPAs today. Call the Tax Law Offices of David W. Klasing at (800) 681-1295 to arrange a legal consultation.

See our Audit Representation Q and A Library
See our Criminal Tax Law Q and A Library

Here is a link to our YouTube channel: click here.

Public Contact: Dave Klasing Esq. M.S.-Tax CPA, [email protected]

SOURCE Tax Law Offices of David W. Klasing, PC

SOURCE Tax Law Offices of David W. Klasing, PC