Consequences for Tax Evasion
There are two certainties in life: death and taxes. And while most individuals have accepted both, there are a few out there who refuse to accept that they must pay a percentage of their hard earned paycheck to the government. These individuals go beyond taking the standard legal deductions used to minimize their tax obligation, and try to avoid paying taxes altogether. This is called tax evasion, or tax fraud, and is punishable at both the state federal levels.
When Tax Fraud is a Civil Offense
There are instances in which an individual may prepare his or her tax return and accidentally show that they earned less than they actually did, or that they paid out more in deductions than they actually did. Because this is not a malicious intent to defraud the government, it is merely a civil offense. If this occurs, the IRS may audit the individual, or open an investigation against them, but in either instance, the IRS will given the individual a chance to correct the return and pay the remainder of what they owe. In some instances, the IRS may charge a five percent penalty for the error; however, if the error is too large to be a “mistake,” they may charge a 75 percent penalty.
When Tax Fraud is a Criminal Offense
When an individual takes drastic measures to avoid accruing and having to pay a large tax debt – such as hiding their income in a foreign bank, underreporting income, overestimating business expenses, or investing in fake companies – then tax fraud turns from a civil offense into a criminal offense. Tax evasion on a criminal level is much more serious, and can result in hefty fines and prison time.
Furthermore, tax evasion is punishable at both the state level and the federal level, so an individual who commits tax fraud is subject to several different punishments, or even stacked punishments.
Penalties for tax evasion include:
- Prison: An individual who knowingly commits tax evasion subjects themselves to serious prison time, with the amount of prison time being as high as five years for just one offense. Convictions on multiple counts of tax fraud, or multiple violations over several years, can result in a lengthy prison sentence. Penalties for each count may be viewed at IRS.gov.
- Fines: The fine for committing even just one count of tax fraud or tax evasion is up to $250,000 for individuals, and $500,000 for corporations. Courts can impose fines in addition to prison time for the same offense.
- Restitution: On top of being fined, an individual who commits tax evasion will have to pay back the taxes that they failed to pay the state and/or federal governments. Restitution is typically ordered in conjunction with other penalties, such as fines and prison time.
- Legal Fees: The federal and state courts will typically order the offender to pay for the costs of prosecution as well as fines and restitution.
- Probation: If a court decides against prison time, they may order probation. Individuals on probation must comply with court orders, which can include attending regular meetings with and reporting to a probation officer, maintaining employment, and contacting the probation officer in the event that they get arrested. If an individual fails to adhere to the rules of probation, they risk being sent to jail.
Consult a Tax Fraud Attorney
If you are charged with tax fraud, contact an Orlando tax fraud lawyer right away. Tax evasion is a serious offense, and it is not one that the courts take lightly. Without adequate representation, you could face millions of dollars in fines and upwards of 20 years in prison. The cost of being convicted for tax fraud is not worth what you might save by trying to defend yourself alone.
At The Baez Law Firm, our Orlando white collar crime attorneys understand that a conviction for tax evasion hinges on the government’s ability to build a case against you. Our lawyers can assess your situation and the evidence against you, and build a strong defense against the government. To combat charges of tax evasion, contact The Baez Law Firm right away at 800-588-BAEZ.