The Consequences of Tax Evasion
The consequences of tax evasion are serious and more severe than any other tax related infraction in the United States. The IRS carefully analyzes tax returns each year, looking for signs of tax evasion, which is defined as the illegal and deliberate non-payment or underpayment of taxes. This can be by an individual or a corporation and most often there is a purposeful and fraudulent nature to the infraction. It is important to note that tax evasion is not committed if legal methods (deductions, tax credits) are used incorrectly to reduce the amount owed on your tax return.
If the IRS contacts you for an audit, they may have seen something on your return that is a red flag to them. While this certainly does not mean that you have committed tax evasion or that you will suffer the serious consequences, it is important to understand the process that is followed in tax evasion cases. We have outlined it below:
1. Right to a hearing: If the IRS contacts an individual that they suspect may have committed tax evasion, that individual has a right to a hearing.
2. Ruling: The IRS will determine if there is evidence that an individual has purposefully evaded or failed to file a tax return. If the IRS can prove that tax evasion has taken place, the individual can be convicted of a crime.
3. Conviction: If an individual receives a felony conviction of tax evasion, he or she can face up to five years in prison plus fines up to $100,000.
4. Lesser convictions: If the IRS cannot prove the deliberate nature of the offense, an individual can also be convicted of lesser offenses including “filing a false return” or “failing to file a return”.
These convictions carry less penalty, but are still significant offenses. Filing a false return is also a felony charge and can result in jail time of up to 3 years and a monetary penalty of up to $100,000. Failing to file a return is a misdemeanor charge that usually can bring up to 1 year of prison time and a $25,000 fine.
Tax evasion will never pay off If you file your own taxes each year, you should make sure that all information on your tax return is correct and accurate. You should never include incorrect information to try to avoid paying taxes or to pay less than you owe. There are many other ways to negotiate with the IRS if you are unable to pay your taxes. Extensions, installment agreements and offers in compromise are legal strategies that communicate to the IRS that you need more time to pay, or even that you are unable to pay. The IRS has several years (often up to 7) to review or audit your return, so just because you do not hear from the IRS immediately does not mean that you will not.
If the IRS has made contact with you and you are concerned that they think that you have evaded your taxes, or if you are trying to come up with a way to solve your complicated tax problems, call a trusted tax firm for help. Success Tax Relief has been providing support to customers all over the country for more than 30 years and has a proven track record of success negotiating with the IRS. We can be reached at 1-877-825-1179, 24 hours a day, 7 days a week. Our customer service representatives are standing by waiting to talk to you and get started helping you solve your tax problem…big or small!