Maryland Criminal Defense · Baltimore City · Baltimore County · Statewide
Maryland Criminal Defense · Baltimore City · Baltimore County · Statewide
IRS Criminal Investigation agents are among the most methodical investigators in federal law enforcement. By the time they contact you, they have typically been building a case for 1–3 years. Allan Rombro has defended federal tax crimes and white collar cases in U.S. District Court since 1989. Don’t face the IRS alone.
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The line between legitimate tax planning, an honest mistake, and criminal tax evasion can be surprisingly thin — and the government does not always draw it fairly. Tax evasion under federal law (26 U.S.C. § 7201) is a felony carrying up to five years in federal prison, $250,000 in fines for individuals, and mandatory restitution of all unpaid taxes plus interest and penalties. Corporations face fines up to $500,000.
The critical word in every tax evasion case is willfulness. The government must prove beyond a reasonable doubt that you knowingly and intentionally evaded taxes you knew you owed — not that you made a mistake, relied on a bad accountant, or misunderstood a complex provision of the tax code. This distinction is the heart of virtually every tax evasion defense.
What most people do not realize is that IRS Criminal Investigation (IRS-CI) special agents are among the most sophisticated and patient investigators in all of federal law enforcement. They rarely move quickly. Cases are built over 1 to 3 years, using financial analysis methods that reconstruct income from the outside in — comparing your known expenditures against your reported income — rather than relying solely on your returns.
The Law Offices of Allan Rombro defends individuals, business owners, and professionals against federal and state tax charges throughout Maryland. Allan Rombro has been admitted to the U.S. District Court of Maryland since 1989 and brings genuine federal courtroom experience to every case. Call immediately — even if you are only at the audit stage. The sooner an experienced attorney is involved, the more options remain open.
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26 U.S.C. § 7201
The willful attempt to evade or defeat any federal tax or its payment. This is the most serious criminal tax offense — a felony requiring proof that the defendant knew taxes were owed and deliberately took an affirmative act to evade them. Common forms: underreporting income, hiding assets offshore, running unreported cash businesses, structuring transactions to avoid reporting, and inflating deductions.
26 U.S.C. § 7206(1)
Willfully making or subscribing a tax return known to be false as to any material matter. Unlike § 7201 evasion, this charge does not require proof that taxes were actually underpaid — it only requires that a false statement was made willfully. This is often charged when the government cannot fully prove the amount of unpaid tax but can prove individual return entries were deliberately falsified.
26 U.S.C. § 7206(2)
Willfully aiding, assisting, procuring, counseling, or advising the preparation of a false tax return. Accountants, tax preparers, attorneys, and financial advisors can be charged under this section even when they did not file the return themselves — if the government can prove they knowingly participated in falsifying it. A single act of assistance to one taxpayer is sufficient for a charge.
26 U.S.C. § 7203
Willful failure to file a return, pay taxes, keep required records, or supply required information. Although a misdemeanor for most individual failure-to-file charges, willful failure to collect and pay over employment taxes (payroll taxes) is a felony. Businesses that withhold payroll taxes from employees and fail to remit them to the IRS are subject to significant criminal exposure.
26 U.S.C. §§ 7202, 7215
Willful failure to collect, account for, or pay over employment (payroll) taxes withheld from employees. Employers who take payroll tax withholdings from employees and use those funds for other business purposes — commonly called "trust fund" violations — face serious criminal liability. The IRS also imposes a Trust Fund Recovery Penalty personally against responsible individuals regardless of corporate structure.
MD Tax-General § 13-1003
Maryland separately prosecutes willful failure to file state returns or pay state income, sales, or withholding taxes. State tax evasion in Maryland is a misdemeanor punishable by up to 5 years in prison and fines up to $10,000 per count. State and federal charges are often filed simultaneously — and statements made to Maryland tax authorities can be used by federal prosecutors.
Criminal tax penalties run alongside — and are separate from — civil tax penalties. Both can be imposed simultaneously. A conviction does not wipe out the civil debt; a civil settlement does not prevent criminal prosecution. Understanding both tracks is essential from the start.
The civil fraud penalty alone — 75% of the underpaid amount — can dwarf the original tax bill. On a $200,000 understatement, the fraud penalty adds $150,000 before a single criminal count is filed.
| Charge | Statute | Max Prison | Max Fine |
|---|---|---|---|
| Tax Evasion | § 7201 | 5 years | $250K / $500K corp |
| False Return | § 7206(1) | 3 years | $250K / $500K corp |
| Aiding False Return | § 7206(2) | 3 years | $250K / $500K corp |
| Failure to File / Pay | § 7203 | 1 year (misd.) | $25K / $100K corp |
| Failure to Pay Employment Tax | § 7202 | 5 years | $10K per count |
| Maryland State Evasion | MD § 13-1003 | 5 years | $10K per count |
Criminal prosecution and civil tax enforcement run simultaneously and independently. Even if criminal charges are not filed — or if you are acquitted — the IRS can still pursue civil penalties that are financially devastating on their own.
Civil fraud penalty: 75% of the portion of the tax underpayment attributable to fraud. On a $100,000 understatement, this adds $75,000 — before interest.
Accuracy-related penalties: 20% of the underpayment when fraud is not established but negligence or substantial understatement is found.
Interest: The IRS charges interest on all unpaid tax from the original due date — compounding daily at the federal short-term rate plus 3%. Years of accumulated interest can dwarf the original tax owed.
Trust Fund Recovery Penalty: If your business failed to remit payroll taxes, the IRS can assess 100% of the unremitted tax personally against every “responsible person” — piercing the corporate structure entirely.
Important: Statements made to IRS civil auditors are not protected from use in a criminal case. If a civil audit begins showing signs of criminal intent — unusual document requests, questions about your motives — stop cooperating and call an attorney immediately.
If you have been contacted by an IRS Criminal Investigation (IRS-CI) special agent — not a regular revenue agent or auditor — the investigation is already criminal in nature. IRS-CI special agents carry badges and firearms, conduct undercover operations, execute search warrants, and refer cases directly to the U.S. Attorney’s Office for prosecution. Do not speak with an IRS-CI special agent without an attorney present. Every word you say will be recorded, documented, and potentially used against you.
IRS Criminal Investigation special agents build cases methodically over 1 to 3 years before making contact with a target. Their investigations typically begin with a financial reconstruction — building a picture of your true income and assets from the outside in, comparing known expenditures against reported income.
Three primary methods are used to prove unreported income without relying solely on your tax returns. Each approach generates its own documentary trail that is difficult to refute without early, expert legal intervention.
IRS-CI cases have one of the highest conviction rates of any federal law enforcement agency — over 90% of criminal referrals result in conviction. This is not because the cases are unwinnable — it is because most people do not get experienced legal representation early enough. The earlier an attorney is involved, the more options exist to challenge the evidence, contest the methodology, and present alternative explanations before the case reaches indictment.
Allan Rombro retains forensic accountants and financial experts to independently analyze IRS methodology, identify errors in income reconstruction, and build a competing financial picture that directly challenges the government’s conclusions.
All bank deposits over a period are totaled and compared to reported income. Unexplained deposits are treated as unreported taxable income. Agents subpoena every bank account — personal, business, and sometimes family members’ accounts. Defense focuses on establishing legitimate non-taxable sources for deposits: loans, gifts, transfers between accounts, proceeds from asset sales, and prior-accumulated cash.
Have a question not answered here? Email Allan Rombro directly for a free, confidential consultation — available 24 hours.
Federal tax evasion under 26 U.S.C. § 7201 carries up to 5 years in federal prison per count and fines up to $250,000 for individuals ($500,000 for corporations), plus mandatory restitution of all unpaid taxes with interest and penalties. Because defendants serve at least 85% of their federal sentence with no parole, a 5-year sentence means roughly 4 years and 3 months of actual incarceration. These criminal penalties are separate from civil tax fraud penalties — a 75% civil fraud penalty on the underpayment — which the IRS can impose simultaneously and independently of the criminal case.
IRS-CI special agents typically use indirect methods to reconstruct unreported income rather than relying solely on tax returns. The three most common are: the net worth method (comparing year-over-year asset growth against reported income), the bank deposits method (totaling all deposits and treating unexplained amounts as income), and the cash expenditures method (documenting known spending and comparing against reported income). These investigations run 1 to 3 years before charges — by which point the government has typically assembled a comprehensive financial picture. Defense involves challenging the methodology, establishing legitimate non-taxable sources for apparent income discrepancies, and contesting the willfulness element.
Yes — and this is one of the most dangerous transitions in tax law. A routine civil audit can become a criminal investigation when the auditor identifies indicators of intentional fraud and refers the matter to IRS-CI. Warning signs include: an auditor who begins asking about your intent or motives; requests for unusual categories of documents; an in-person meeting request; or the appearance of IRS-CI special agents rather than revenue agents. If any of these signs appear, stop providing additional information and contact an attorney immediately. Critically, everything you told the civil auditor before this point can be used against you in the criminal case — there is no protection against self-incrimination in a civil audit context.
Always through your attorney. A forensic accountant or financial expert you retain directly is not protected by attorney-client privilege — they can be compelled to testify against you and to produce all documents and analyses from their engagement. An expert retained by your attorney to provide legal assistance, however, is covered by the Kovel doctrine — an extension of attorney-client privilege that protects the expert’s work and communications from disclosure. This structural distinction is one of the most important practical decisions in a tax defense, and it must be made correctly from the beginning of the case.
The sooner you act, the stronger your defense. Free consultation, available 24 hours.
Speak directly with Allan Rombro. Available 24 hours.
🔒 Confidential & no obligation. Your information is never shared.