Tax Law Violation in New York: Criminal Conduct and Penalty Guidelines

The following actions are considered criminal violations under New York tax law:

• Deliberate underreporting or concealment of income
• Falsification or destruction of tax-related documents
• Use of tax-exempt fuel for unqualified purposes
• Abuse of tax-exemption certificates or fuel credit cards
• Evasion of tax liens through fraudulent transfers
• Assisting others in submitting false returns

Each of these acts demonstrates willful intent to defraud tax authorities and trigger specific penalties.

The following table presents general sentencing recommendations used by New York courts:

The presence of intent, destruction of records, or involvement in complex fraud schemes can push sentencing toward the higher end of each range.

Note: These are not statutory ranges. Sentencing is based on the degree of offense and facts of the case.

New York's tax law explicitly criminalizes the following:

• Destruction of Records (Tax Law §1804): Intentional destruction of financial records within 5 years of a filing deadline, punishable by up to 1 year imprisonment or a $10,000 fine.
• Assisting False Filing (Tax Law §1803): A tax preparer knowingly submitting false claims may be charged with a felony.
• Evasion through Transfers (Tax Law §1802): Hiding assets to avoid tax liens can lead to both civil forfeiture and criminal charges.

Each charge may be compounded with other fraud-related offenses under Penal Law Articles 155 (Larceny), 175 (Forgery and False Filing), or 176 (Insurance Fraud) when applicable.

Tax-exempt fuel provided under New York’s Article 12-A must be used strictly for authorized activities. Selling or diverting such fuel is classified as criminal possession and may result in:

• Imprisonment of up to 3 years
• Fines up to five times the evaded tax
• Suspension from future exemption programs

If a tax-exempt fuel card is issued to a deceased person or non-qualified recipient (e.g., expired business), the agency or person involved can be subject to penalties under NYS Penal Law Article 175.

If a taxpayer knowingly destroys ledgers, receipts, or digital tax files after a filing deadline but within the statute of limitation, they may face:

• Class A misdemeanor charges
• Up to 1 year in prison
• Up to $10,000 in penalties per offense

Such conduct may also trigger enhanced audit procedures or referral to the New York State Attorney General.

Under New York law, third parties may be charged as accomplices or co-conspirators if they knowingly assist in filing false tax returns. Felony charges depend on both the level of involvement and the monetary amount, as defined under Penal Law Article 20 and relevant Tax Law sections.

Criminal investigations may be initiated under the following circumstances, though no statutory threshold strictly applies:

• Substantial evidence suggests intentional evasion, often involving amounts over $50,000
• There are indications of document destruction, concealment, or tampering
• False claims involve misuse of state tax credits, exemptions, or refunds

Unlike civil audits, criminal investigations are unannounced and may proceed without prior notice. Subpoenas for records or witness testimony may be issued as part of the inquiry.

Upon investigation, the taxpayer may face:

1. Monetary Settlement – Available if taxpayer admits wrongdoing and pays assessed liabilities.
2. Deferred Prosecution – Reserved for cooperative individuals with lesser offenses.
3. Felony Charges and Prosecution – Imposed for large-scale, intentional schemes or organized efforts to defraud the State.

If penalties are not resolved through administrative means, the matter escalates to the New York State Supreme Court or relevant criminal jurisdiction.