Charged Under 26 U.S.C. 7201 What Happens Next

A charge under 26 U.S.C. § 7201 arrives at the end of a process that has usually been running for a long time. By the time an indictment issues, special agents have gathered financial records, spoken to people around the taxpayer, and produced a computation of what they say was owed, and the Tax Division of the Department of Justice has authorized the prosecution. The defense starts behind and has to close that gap quickly.

This page sets out the sequence that follows in the Eastern District of Virginia and what tends to matter at each stage. It is general information about federal procedure rather than advice about any particular matter.

On this page

From Charge to First Appearance

A federal tax matter can begin with an indictment returned by a grand jury or, where there has been negotiation, with a charging document filed by agreement. Notice comes either through a summons to appear or through arrest, and counsel can often arrange a self-surrender in place of an arrest where contact is made early enough.

At the initial appearance the charge is stated, counsel is identified, and release is addressed. Arraignment follows, a plea of not guilty is ordinarily entered so that the schedule opens, and the court sets deadlines. The speed of what follows surprises people who expected the pace of the civil process they had been dealing with.

Release Conditions and Financial Restrictions

Release in a tax matter is ordinarily uncontroversial in principle and detailed in practice. Conditions frequently address travel, surrender of a passport where foreign accounts or foreign residence are part of the picture, and restrictions on transferring or encumbering assets. Where a business is involved, conditions can reach the defendant’s role in its finances.

Those conditions are negotiable at the outset and awkward to change afterwards, so a defendant who needs to travel for work, or who must continue signing for a business, should raise it before conditions are set rather than after.

Discovery and the Computation

Discovery in a tax matter is document heavy and mostly financial. The material that matters is the government’s own computation of the deficiency, together with the assumptions behind it, the workpapers of the agents who prepared it, the third-party records relied on, and any statements attributed to the defendant.

Requests should ask for the method and its inputs rather than the totals. Where an indirect method was used, the opening position, the treatment of nontaxable sources, and the handling of transfers between accounts are where the computation is tested. An accountant instructed by the defense should begin work on the same records early, because that analysis takes time and because the figure it produces shapes both the trial position and any negotiation.

The Civil Side Continues to Exist

A criminal charge does not extinguish the civil liability. Interest and civil penalties are assessed under separate provisions, collection activity has its own timetable, and statements made in the civil process can find their way into the criminal one. Anyone dealing with both at once needs the two coordinated by counsel, so that positions taken on one side do not damage the other and so that credit for payments is recorded properly.

The Pace of This District

The Eastern District of Virginia sets early deadlines and enforces them. Motions practice is compressed, the interval between arraignment and trial is shorter than in many districts, and continuances are not readily assumed. In a case whose substance is an accounting dispute, that pace is the central practical problem, because the analysis that answers the government’s computation is slow work and the schedule is not.

The consequence is that the retention of an accountant, the discovery demands, and the decision about which component of the offense to contest all belong in the opening weeks rather than in the month before trial.

Records and Statements

Two rules apply from the moment a person learns of a charge. Records are preserved rather than tidied, because alteration or destruction after notice creates a separate and easier case for the government and forfeits arguments that would otherwise be available. And statements stop, including statements made by employees, family members, and business partners who believe they are helping.

Agents may still make contact. Declining politely and referring them to counsel is not an admission of anything, and it prevents an informal conversation from becoming evidence with a version of events written by someone else.

Frequently Asked Questions

Will I be arrested at home?

Not always. In financial matters the government frequently proceeds by summons, and where counsel is involved before an indictment is unsealed a self-surrender can often be arranged. That is one of several practical reasons to obtain counsel as soon as contact occurs rather than waiting for a charging document to arrive.

Can I keep running my business?

Usually, subject to release conditions. Where the business is connected to the alleged conduct, conditions can restrict a defendant’s role in its finances or require notice before significant transactions. Because those conditions are set at the outset and are harder to alter later, the practical needs of the business should be put before the court when release is first addressed.

Should I file my current returns while the case is pending?

Filing obligations continue and do not pause because a prosecution exists, but what is filed while a case is pending can have consequences in it. This is a question to take to counsel before anything is signed, so that the filing is made in a way that meets the obligation without creating a new problem.

How long does a federal tax case take?

Less time than most people expect in this district. The Eastern District of Virginia is known for a compressed schedule, and the interval between arraignment and trial leaves limited room for the accounting analysis these cases require. That is a reason to begin the defense computation immediately rather than after discovery is complete.

What if I disagree with the amount the government says I owe?

That disagreement is often the case. A tax due and owing beyond what was reported is a component the government must prove, and the figure also drives the sentencing calculation if there is a conviction. The way to contest it is with an independent computation from the same records, which is why the accounting work is retained early and directed by counsel.

Can a charge be resolved without a trial?

Many are. Resolutions include a plea to a different Title 26 count, an agreed treatment of the tax loss figure that shapes the guideline calculation, and occasionally a decision not to proceed where the computation does not hold. What is achievable turns on the strength of the deficiency proof and the willfulness evidence. No outcome can be promised in advance.

Working With Law Offices Of SRIS, P.C.

The opening weeks decide a tax case, because the accounting analysis that answers the government takes longer than the schedule allows for a late start.

Mr. Sris, Owner and Founder of Law Offices Of SRIS, P.C., is a former prosecutor and is admitted in Virginia, Maryland, the District of Columbia, New Jersey, and New York. The firm has been practicing since 1997. Mr. Sris and the firm’s Of Counsel attorneys handle criminal defense matters across those jurisdictions, which matters in federal practice because a single investigation frequently reaches conduct, witnesses, and records in more than one state. Mr. Sris brings a background in accounting and information systems from George Mason University, applied to complex financial and technology-related cases.

The firm serves Northern Virginia from 1655 Fort Myer Dr, Suite 700, Room 719, Arlington, VA 22209 and central Virginia from 7400 Beaufont Springs Drive, Suite 300, Room 395, Richmond, VA 23225. By appointment. Call (888) 437-7747 to schedule. Request a consultation. Reach our location at (888) 437-7747.

This page provides general information about what happens after a federal charge under 26 U.S.C. § 7201 and does not create an attorney-client relationship. Case results depend on a variety of factors unique to each case. Results may vary.

Attorney advertising. Prior results do not guarantee a similar outcome.

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