The state of New Jersey recognizes several different types of tax-related crimes:
All of these crimes fall under the broad category of tax fraud. They are serious and carry steep penalties with huge repercussions. See also Financial Crimes, White Collar Crimes, Fraud, and Income Tax: Fraud vs. Negligence to learn more.
New Jersey Tax Fraud
Specifically, New Jersey tax fraud involves making a representation that is false and material. The false representation is made by an individual or business on a tax return in order to limit their amount of tax liability. Tax fraud essentially entails cheating on a tax return in an attempt to avoid paying the entire tax obligation. Examples of tax fraud include claiming false deductions, claiming personal expenses as business expenses, and simply not reporting income.
New Jersey Tax Evasion
Income tax evasion occurs when a person does not file a tax return when they are required to in order for their tax filings to be complete and accurate. It usually involves paying less money for your taxes than you legally are obligated to.
"Tax evasion" should be distinguished from "tax avoidance." Tax evasion is the unlawful act of trying to hide one's tax liability. Tax avoidance, on the other hand, is perfectly legal, and simply involves using the tax laws strategically, to reduce one's actual tax liability as much as possible.
Penalties
Penalties for both crime can be civil and criminal. State and federal governments aggressively use the criminal law to enforce tax violations. In addition to state law penalties, individuals committing tax fraud can also be investigated by the Internal Revenue Service (IRS).
The following table highlights the main provisions of New Jersey's tax fraud and tax evasion laws.
| Who enforces the laws? | New Jersey Department of Treasury, Office of the Attorney General |
| What is Prohibited | Purposefully failing to file any required tax report or return; or filing a false/misleading document in connection with any tax return, audit or investigation or failing to supply the correct information in a timely manner. Also, intentionally evading any tax or failing to pay a tax; or claiming a false exemption. |
| Penalties | Criminal (Felony or Misdemeanor) and civil penalties |
| Tax Fraud and Possible Associated Crimes | Tax fraud, tax evasion, forgery, falsifying business records, and offering a false instrument for filing. |
| Whistleblower Laws | New Jersey False Claims Act |
| Common Types of Tax Fraud/Tax Evasion | Â
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Because tax laws can sometimes get extremely complicated, it may also be a good idea to consult an experienced New Jersey criminal defense or a tax attorney if you have questions about your specific situation.
