Philadelphia Tax Fraud Lawyers

Welcome to Spodek Law Group. Our mission is simple: we believe everyone deserves a fighting chance when the government comes after them. If you're reading this, something happened that made you search for tax fraud lawyers in Philadelphia. Maybe the IRS sent a letter. Maybe federal agents showed up at your business. Maybe your accountant called with news that made your stomach drop. Whatever brought you here, you need to understand something most people don't realize until it's too late.

Philadelphia is one of the few major American cities with three levels of income taxation. Federal taxes. Pennsylvania state taxes at 3.07%. And Philadelphia city wage tax at 3.87% for residents. Most people think about "dual sovereignty" - the constitutional doctrine that allows both federal and state governments to prosecute you for the same conduct. In Philadelphia, it's triple sovereignty. Three governments. Three tax agencies. Three potential investigations. The Eastern District of Pennsylvania doesn't just coordinate with Harrisburg. They coordinate with City Hall too. You're not facing two prosecutors. You're facing three.

Most people don't even think about Philadelphia's wage tax as a serious criminal exposure. It's just another line on the paycheck, another form to file. But the City of Philadelphia has its own Department of Revenue with its own investigators and its own enforcement powers. When you underreport income to the IRS, you're also underreporting to Pennsylvania. And you're also underreporting to Philadelphia. One act of fraud triggers three separate violations. Three potential prosecutions. Combined exposure that exceeds what you'd face in New York, Los Angeles, Chicago, Houston, or Phoenix. If you're facing similar issues in other cities, see our guides on New York City tax fraud lawyers, Los Angeles tax fraud lawyers, or Chicago tax fraud lawyers.

Triple Prosecution: Philadelphia's Unique Tax Threat

Heres the thing most people dont understand about tax fraud in Philadelphia. That 3.87% city wage tax isnt just a nuisance. Its a criminal statute. Philadelphia has explicit provisions against tax evasion at the city level. When you file false information with the city - or fail to file at all - your not just committing a civil violation. Your committing a potential crime. And the City of Philadelphia has the authority to pursue criminal charges independant of what the feds or the state decide to do.

Think about what that means. In most American cities, tax fraud prosecution is a two-front war. Federal prosecutors at the IRS and DOJ. State prosecutors working with the state tax agency. In Philadelphia, its a three-front war. Federal prosecutors at the Eastern District of Pennsylvania. State prosecutors coordinating with Pennsylvania Department of Revenue. And city prosecutors working with Philadelphia Department of Revenue. Three seperate investigations. Three seperate charging decisions. Three seperate potential sentences.

And heres were it gets worse. These three agencies share information. When the IRS finds discrepancies in your federal return, they share that data with Pennsylvania. When Pennsylvania identifies unreported income, they share with Philadelphia. When Philadelphia audits your wage tax filings, they share with both state and federal. Your not hiding from one agency. Your trying to hide from a network that talks to each other constantly. Any inconsistency - any discrepancy between what you told one agency versus another - becomes evidence of fraud.

The numbers add up fast. Federal tax evasion: up to 5 years per count. Pennsylvania tax fraud: up to 7 years for felony tax evasion. Philadelphia tax violations: additional criminal exposure. And these can run consecutively, not concurrently. Combined, the potential prison time in Philadelphia exceeds what you'd face in cities with only dual sovereignty. Triple taxation creates triple prosecution creates triple sentencing exposure.

The Eastern District of Pennsylvania

Most people only think about the IRS when they think about tax fraud prosecution. Thats a mistake that destroys lives. The Eastern District of Pennsylvania is one of the largest and busiest federal districts in America. EDPA handles cases across eastern Pennsylvania including Philadelphia, and the prosecutors here have decades of experience in white-collar crime. This isnt a small district learning on the job. This is a major federal court with sophisticated prosecution capability.

The Eastern District works hand-in-hand with IRS Criminal Investigation. The FBI Philadelphia field office has a dedicated financial crimes squad. These agencies coordinate seamlessly. They share intelligence. They build cases together. When you become a target in Philadelphia, your not facing a single agency investigation. Your facing a multi-agency task force with shared expertise and unlimited patience. They can investigate for years before you ever know theres a problem.

EDPA has prosecuted major tax fraud cases involving sophisticated financial schemes. They understand complex business structures. They understand partnership taxation. They understand cash flow manipulation. The prosecutors here have seen every scheme Philadelphia businesses try to run - the unreported cash sales, the inflated expenses, the phantom employees, the offshore accounts. Your clever accounting dosent impress them. Your complicated corporate structure dosent slow them down. Theyve seen it before.

And heres the part most people miss. The federal prosecutors in Philadelphia coordinate with both state AND city authorities. Joint investigations are common. Information sharing is constant. When one agency gets a lead, all three agencies benefit. You cant play one against the other. You cant hope the left hand dosent know what the right hand is doing. In Philadelphia, all three hands work together.

Pennsylvania Department of Revenue: The Second Front

Pennsylvania has its own tax fraud prosecution capability that operates completly independently of the federal government. The Pennsylvania Department of Revenue has criminal investigation authority. They can refer cases to state prosecutors who can charge you under Pennsylvania law. Seperate charges. Seperate trial. Seperate sentence.

Pennsylvania's income tax rate is 3.07% - a flat rate that applies to everyone. That might seem low compared to California's 13.3% or New York's 10.9%. But dont let the rate fool you. Pennsylvania prosecutors are aggressive about tax fraud. PA DOR has extensive enforcement powers. They can audit. They can investigate. They can seize assets. And when they find evidence of fraud, they refer to the Attorney General's office for criminal prosecution.

Heres the part that makes this dangerous. Pennsylvania tax fraud can be prosecuted as a felony carrying up to 7 years in prison. Thats on top of whatever federal sentence you receive. And Pennsylvania sentences dont run concurrently with federal sentences unless the judge specifically orders it. You serve one, then you serve the other. Two seperate prison terms for the same underlying conduct.

And Pennsylvania never stops collecting. PA DOR can garnish wages. Seize bank accounts. Place liens on property. Even if you somehow survive prosecution, even if you serve your time, Pennsylvania can keep coming after the money for years. Tax debt dosent disappear. Tax debt follows you forever.

Philadelphia City Wage Tax: The Third Front

Now heres what makes Philadelphia truly unique. The city wage tax. Philadelphia has one of the highest city-level income taxes in America - 3.87% for residents, 3.44% for non-residents who work in the city. This isnt a minor withholding. This is a significant tax that generates billions for the city. And when you evade it, the city takes notice.

The Philadelphia Department of Revenue has its own enforcement division. They audit wage tax filings. They investigate discrepancies. They pursue collections aggressively. And while Philadelphia's criminal prosecution of tax fraud is less common then federal or state, the city has the authority to pursue criminal charges. One more layer of exposure. One more agency building a file on you.

Think about what this means for cash businesses. The restaurants on South Street. The contractors in the suburbs. The corner stores in every neighborhood. If your underreporting income, your not just cheating the IRS. Your cheating Pennsylvania. And your cheating Philadelphia. Three victims. Three investigations. Three potential prosecutions. The cash economy that makes Philadelphia famous is exactly the economy all three agencies love to prosecute.

And heres the part that catches people off guard. The city coordinates with both federal and state authorities. When Philadelphia DOR identifies unreported income, they share that information with PA DOR and the IRS. A city audit can trigger a state investigation. A state investigation can trigger federal scrutiny. One small discrepancy in your city wage tax return can unravel your entire tax history across all three jurisdictions.

When Your Civil Audit Becomes Criminal

An IRS audit seems like a tax problem, not a criminal one. Your dealing with a Revenue Agent, answering questions, providing documents, trying to resolve the issue. Its stressful but it feels managable. Your cooperating. Your being helpful. Your doing everything there asking. But heres what nobody tells you - that auditor is trained to spot criminal indicators. And when they find them, they refer you to Criminal Investigation without telling you.

Let that sink in. The person your cooperating with, the person your trying to help, the person your providing documents to - that person can send your file to criminal investigators and never tell you it happened. The referral happens through Form 2797. Your never notified when this form is filed. There no letter, no phone call, no warning. The civil audit continues like nothing changed, but in the background, a Special Agent has been assigned to your case and evidence gathering begins.

Everything you said during your "civil" audit - every explaination you gave trying to be helpful - is now being compiled into a criminal case against you. Your cooperation is building the prosecutions file:

• The helpful documents you provided? Evidence.
• The detailed explainations you gave? Admissions.
• The questions you answered honestly? Self-incrimination.

You were building the case against yourself and you didnt even know it.

Heres the part that makes defense lawyers cringe. You might think your accountant protects you. Theres no accountant-client privilege for tax matters. None. Your accountant can be compelled to testify against you. Your CPA can be subpeonaed. Your bookkeeper can be put on the witness stand. Everyone you talked to about your taxes becomes a potential witness for the prosecution. The person you hired to help you can become the governments star witness against you.

And in Philadelphia, this audit-to-criminal pipeline exists at all three levels. An IRS audit can trigger federal prosecution. A PA DOR audit can trigger state prosecution. A Philadelphia audit can trigger city enforcement. And all three agencies share information. What you tell one becomes evidence for all three. Inconsistencies between your federal, state, and city returns become proof of intentional fraud.

Federal Tax Fraud Penalties in Pennsylvania

Federal tax evasion under 26 USC 7201 carries up to 5 years in prison per count. Thats the starting point. But heres were Philadelphias triple-tax system creates compounded exposure. Pennsylvania tax fraud adds up to 7 more years. Philadelphia violations add additional exposure. Combined, the potential prison time exceeds what youd face in any other major American city.

Fines for federal tax evasion can reach $100,000 for individuals and $500,000 for corporations. Pennsylvania adds its own fines. Philadelphia can impose penalties. Plus restitution to all three jurisdictions - every dollar you allegedly evaded from federal, state, AND city, with interest and penalties. The financial destruction can be total.

OK so heres were the math gets scary. Federal conviction: 5 years per count. Pennsylvania conviction: up to 7 more years. Sentences can run consecutively. You serve one, then you serve the other. Add multiple counts on each side, and your looking at combined exposure that can exceed fifteen years. And federal sentences are served at 85% minimum - no early release for good behavior. When the federal government says five years, they mean at least four years and three months.

Restitution in Philadelphia tax fraud cases means paying back every dollar you allegedly evaded from all three jurisdictions. The IRS charges penalties on top of the principal. Pennsylvania charges its own penalties. Philadelphia adds interest. Combined, the financial consequences can follow you for the rest of your life. And dont think bankruptcy will save you - tax debts are extremly difficult to discharge.

Signs Your Already a Criminal Target in Philadelphia

When federal agents contact you, the type of agent matters more then anything else. IRS Revenue Agent means civil audit - you still have time to prepare, options are still open, your not necesarily in criminal jeopardy. IRS Special Agent means criminal investigation - they've already decided your a target. If a Special Agent shows up at your door, the investigation has been running for months or years before you ever knew about it.

How do you know which type your dealing with? Special Agents carry badges and guns. Revenue Agents dont. Special Agents will introduce themselves as being from IRS Criminal Investigation. There not there to audit your return. There not there to help you resolve a tax problem. There there to gather evidence for a criminal prosecution. And by the time they show up, theyve already reviewed your returns, analyzed your bank records, interviewed witnesses, and concluded that you probably commited a crime.

The same applies to Pennsylvania Department of Revenue criminal investigators. If someone from PA DOR's criminal investigation unit contacts you - not a regular auditor, but an investigator - the criminal case is already being built. These arnt civil auditors. There investigators. There visit isnt the beginning of the investigation. Its near the end. There just collecting the final pieces before handing the case to prosecutors.

Your instinct will be to explain yourself. Clear things up. Show them your not a criminal. Answer there questions. Provide more documents. Cooperate fully. This is exactly what they want, and it destroys your defense. Anything you say without a lawyer present becomes evidence. Every word. Every document. Every helpful explaination. And investigators are trained to ask questions that elicit incriminating responses. They know what there doing. You dont.

The correct response is to politely decline to answer and call a tax fraud attorney immediatly. Not tomorrow. Not after you "get your documents together." Not after you talk to your accountant. Immediatly. Every minute you spend talking to a Special Agent without counsel is a minute your making your situation worse.

What Happens in the First 48 Hours

The moment you learn of a criminal tax investigation, a clock starts. You have 48 hours before critical options start closing. Agents are trained to extract statements fast - before you have time to think, before you can talk to a lawyer, before you understand whats happening. Every word you say without counsel is a mistake that cant be undone.

Heres what there doing while your panicking:

• Interviewing your employees
• Talking to your vendors
• Questioning family members
• Seizing documents
• Freezing bank accounts
• Issuing subpoenas
• Building there case

Your business is being dismantled while you try to figure out whats happening. By the time most people understand the severity, the damage is already done.

And heres the part most people dont think about. Your family members can be brought in for questioning. Your spouse can be subpeonaed. Your adult children can be interviewed. Anyone who might know anything about your finances can be compelled to talk. And what they say becomes evidence. Not just against you - potentialy against them too. Tax fraud investigations have a way of expanding to include everyone in orbit.

The only correct action in the first 48 hours: say nothing, sign nothing, call a tax fraud lawyer. Not a general attorney who dabbles in tax issues. Not your cousin who passed the bar. Someone who handles federal tax crimes exclusivly. Someone who understands IRS-CI, the Eastern District, and Pennsylvania prosecution. Someone whos been in the trenches. This is the one window were intervention can change everything.

Real Philadelphia Tax Fraud Cases That Destroyed Lives

Think your to small to prosecute? Philadelphia-area tax preparers get prosecuted regularly. Neighborhood shops that help working-class families file there returns. Nothing glamorous. Nothing high-profile. But the Eastern District dosent care about glamour. They care about proveable fraud and guaranteed convictions. The size of your operation dosent protect you. The only thing prosecutors care about is wheather they can prove the case.

Maybe you think cash businesses are to hard to track. The restaurant owner who dosent ring up every sale. The contractor who quotes a lower price for cash. The service provider who dosent report tips. Philadelphia investigators have seen it all. They know the patterns. They know the ratios. They know when a business is reporting unrealisticaly low income for its type and location. And they investigate.

Heres what all these cases have in common. Everyone thought they were to smart or to small to prosecute. "They wont come after me." "I'm not a big enough fish." "My situation is different." "Cash is untraceable." IRS-CI has a 90% conviction rate for a reason - they only bring cases there certain to win. If your reading this because agents contacted you, your already on there radar. The question isnt wheather your going to be investigated. The question is what you do about it.

Why You Need a Philadelphia Tax Fraud Lawyer NOW

Your reading this because something happened. An agent visit. A letter. A subpoena. A phone call from your accountant that made your stomach drop. Right now, today, you have options you wont have next week. Pre-indictment intervention can sometimes prevent charges. Voluntary disclosure programs may still be available. Cooperation agreements can be structured. Plea negotiations can begin early. But that window closes fast.

Heres were the timing matters. Before indictment, your a "target" or a "subject" - categories that have some room for manuver. After indictment, your a defendant. The charging decision has been made. The grand jury has returned a true bill. Your facing trial. Everything changes. The leverage shifts. The options narrow. The cost skyrockets.

At Spodek Law Group, we handle federal tax fraud cases. Todd Spodek has defended clients against IRS-CI, Eastern District prosecutors, and Pennsylvania state prosecution. We understand the unique triple threat your facing in Philadelphia - where federal, state, AND city tax agencies all want a piece of you. We've seen what happens when people wait. We've seen clients who talked to agents without counsel and destroyed there own cases. We've seen business owners who thought they could handle it themselves and ended up in federal prison.

The consultation is free. The cost of waiting isnt. Call 212-300-5196. The prosecutors arnt waiting for you to get organized. There building there case right now, today, while your reading this article. There interviewing witnesses. There reviewing documents. There preparing charges. The question is wheather you'll have representation when they make there move - or wheather you'll be one more conviction in there 90% rate.

We've been doing this for years. We know how IRS-CI builds cases. We know how Eastern District prosecutors think. We know how Pennsylvania pursues tax fraud charges. We know the judges, the courtrooms, the procedures. And we know what happens to people who try to navigate this system without experienced counsel. Some of them are in federal prison right now, serving sentences that could have been avoided or reduced if they had called a lawyer earlier.

The choice is yours. But the window is closing. Every day you wait is a day the government spends building there case against you. Make the call. Protect yourself. Protect your family. Protect your future. Because once the indictment comes down, protecting becomes much, much harder.