When Does the IRS File Criminal Charges?
If you have been the subject of an IRS investigation or the IRS has been in touch with you about a potential audit, tax evasion or tax fraud, you should be aware of some basic facts regarding what the IRS can (and cannot) do in terms of filing criminal charges against you. Keep in mind that making an honest mistake on your taxes is not illegal and you will not mistakenly go to jail if that is what happened. The key here is to be knowledgeable and proactive and know when to get help.
Statistics for Being Prosecuted by the IRS
When the IRS initiates contact with you over a serious matter (audit, tax evasion, tax fraud), you should definitely take note and be prepared to respond. But do not panic. It is actually very rare for an individual to be investigated for tax fraud (2%) and of those who are, only 20% are actually ever prosecuted (criminally or via a civil suit). Despite the low odds, you want to be aware of the process and the steps to take to avoid criminal charges.
- Tax Fraud: It is definitely a crime to deliberately cheat on your tax return. The IRS does not take this lightly. Individuals who cheat on their taxes most often misrepresent their annual income and indicate that they received less in a year than they actually did. Tax fraud is defined as cheating on your tax return to avoid paying the entire amount due. In order to be prosecuted for tax fraud, the IRS has to prove that you did this intentionally. As you might imagine, this is not an easy task so in any given year about .0020% of all taxpayers are convicted of tax fraud. In the rare cases where tax fraud is proven, it is punishable with jail time and large fines.
- Tax Evasion is a subset of tax fraud and also carries with it similar penalties as tax fraud.
Mistakes Are Just Mistakes
Being negligent or avoiding paying your taxes is not illegal. When you do this accidentally, you are not deliberately concealing income or deliberately lying on your tax return. These are generally honest mistakes and the IRS is trained to understand the difference between tax fraud, tax evasion and negligence, so do not spend too much time worrying about being criminally charged for a mistake.
What You Can Do If You’re Still Concerned
If you are concerned that the IRS may be ready to file criminal charges against you for tax fraud or tax evasion, the best advice is to get help. Consider hiring a tax attorney and/or a tax firm that can help you build a strong case for yourself. The first step in this process is always an audit. It is wise to get help at that point in the process so that, in the event the IRS continues to pursue a case against you, you have representation and a team who can help defend you.
Success Tax Relief is a full service tax firm that specializes in helping clients all over the country prepare for audits. We can also help you decide the best way to proceed if you are concerned that the IRS is planning to file criminal charges. Contact us today and speak with one of our professionals to see how you should move forward.