Tax Evasion Penalties

Tax evasion penalties are no joke. The government incarcerates thousands of people every year for tax crimes. Do you know the IRS’s tax fraud punishments?

Frequently, tax fraud punishment is no more than a civil penalty. But, rare cases exist in which the taxpayer can experience criminal charges–when an IRS auditor hands your case over to the IRS Criminal Investigation Unit.  

Jeff Weeden is a Denver attorney with extensive experience in white-collar crime. Tax fraud is a category of white-collar crime that encompasses anything from tax evasion to failure to disclose assets. Essentially, tax fraud is an attempt to lie to defraud the IRS. There are both civil and criminal penalties for tax fraud. 

In this post, we’ll answer some of your questions about tax fraud and describe possible tax fraud punishment. 

What is the Tax Fraud Punishment for Filing a Fraudulent Return?

Filing a fraudulent tax return is a felony. It is much more common than tax evasion, and the penalties are less severe. 

But the consequences are still quite steep. It is punishable by up to a $100,000 fine, or $500,000 for corporations, and 3 years’ imprisonment.  

Keep in mind that the IRS is not out to get responsible taxpayers. You have to intentionally and knowingly lie on your tax documents for the IRS to become involved. This would include things like repeatedly leaving certain income off your tax statements or changing your income forms to reflect false information, for the most part.

What if You’ve Been Wrongfully Accused of Tax Fraud?

On rare occasions, the IRS gets it wrong, though. And there’s not much more alarming than being accused of a crime you didn’t commit. Sure, you’re innocent until proven guilty. Simply being charged with a tax fraud crime can come with a number of consequences in itself.

Regardless of your situation, whether you believe you did nothing wrong or if you realize you messed up, hire an attorney immediately. In every case, the prosecution has a trained professional to look at the evidence. If you opt out of hiring a lawyer, it’s going to be an uphill battle since you aren’t qualified to do the same to defend yourself. 

When Should I Hire an Attorney for Tax Fraud?

Usually, if the amount in question is less than $100,000, the IRS will make a formal request that you fix the issue. If you do not comply, they will launch a formal investigation. 

If the amount is more than $100,000, two IRS agents will show up at your home or office to ask you some questions. If this happens, it’s definitely time to hire an attorney. Politely tell the IRS agents that you do not want to answer questions. This is for one simple reason: the IRS knows more than you think they do. 

Be sure to be honest with your attorney so they can defend you adequately. 

What is the Tax Fraud Punishment for Failing to File a Tax Return?

This tax crime is usually a misdemeanor. Although it is unlikely, you could face up to a year in jail and $25,000 in fines for failing to file a tax return. You will pay this $25,000 in fines for each year you fail to file.

You may face civil penalties for any tax return you fail to file, no matter how long ago it was due. You can only face criminal charges if the tax return was due fewer than six years ago. This means that once you fail to file a tax return, the IRS has six years to contact and punish you. Once this time passes, the IRS will usually not pursue charges. 

The IRS will contact non-filers in one of four ways: 

  • Phone
  • Letter 
  • Formal notice
  • A visit from an IRS agent

If the IRS cannot contact you in any of these ways, it will set a deadline for you to file the return. An agent will visit you again. If your failure to file a tax return results in a special agent from the IRS, you can be certain that you are the subject of a criminal investigation. 

Additionally, as long as you file the tax return before the IRS contacts you, you are in the clear. If you file a return but do not pay the taxes due, the IRS will not charge you with a crime. Rather, they will assess penalties and add interest to the amount due.  

What Are the IRS’s Tax Evasion Penalties?

This is a type of criminal felony where a taxpayer uses illegal means to conceal or misrepresent their financial details. 

If a court convicts a taxpayer of tax evasion, penalties could include up to 5 years in jail. Fines could total up to $100,000. Tax evasion is different than simply filing a false tax return. 

Tax evasion is a white-collar crime that often goes hand in hand with other crimes. Individuals who engage in criminal enterprises will often commit tax evasion because to report all their sources of income would be an admission of guilt. 

Tax evasion is also different than tax avoidance. Tax avoidance is not technically illegal. Avoidance is using legitimate means to pay as few taxes as possible; this involves maximizing deductions and utilizing gray areas of the law. Tax evasion requires that you take illegal action to not pay taxes.   

Tax Fraud Punishment for Failing to Pay Taxes or Keep Records

This is a misdemeanor. The penalties will usually be civil rather than criminal. But though it is unlikely, you could face up to 1 year in jail and $25K in fines in criminal penalties. 

Tax Fraud Punishment for Failing to Disclose Offshore Bank Accounts 

If the IRS can prove you failed to disclose offshore bank accounts, you can face fines of more than $120,000 per violation per year. The fine may also be 50% of the account balance at the time of the violation. 

Criminal penalties may also include up to a five-year prison sentence or fines of up to $250,000. 

If your failure to disclose an offshore account occurs in conjunction with another crime, criminal tax fraud punishment could total up to $500K, ten years in jail, or both. 

Contact WeedenLaw

Since 2005, Jeffrey L. Weeden has been practicing criminal defense law in Colorado and has helped countless clients protect their rights and freedoms as a respected, caring, hard-nosed white collar crime attorney.

Over the course of his career, Mr. Weeden’s work has been recognized in numerous ways, including being named to the Top 100 Trial Lawyers list by The National Trial Lawyers, earning a 10.0 “Superb” Avvo rating, receiving Martindale-Hubbard’s highest peer review rating — AV Preeminent, and being asked to speak on several issues of interest to the legal community.

Additionally, he is someone who cares deeply about his community and those in need and is an active member of a number of professional legal organizations, including the Rocky Mountain Children’s Law Center and Law Firm Pro Bono Coordinators.

Jeff Weeden helps those accused of white-collar crimes in the Denver, Colorado area, including Colorado extortion crimes, honest services fraud in Colorado, and Colorado check fraud.

Act Now—Call Attorney Jeff Weeden To Build A Solid Defense Strategy Against These Serious Charges. For a free initial consultation, call 720-307-4330. Since Weeden is a 24-hour Denver attorney, phone answers 24/7 and collect calls from inmates are accepted.

Return to Blog Home