Lying on Tax Returns: What Are the Consequences?
Taxes are a reality for everyone that earns an income by working. The federal government relies on the revenue generated by taxes and the Internal Revenue Service takes steps to make sure that everyone pays what they owe.
If someone attempts to avoid paying taxes by lying on their annual tax return, they may be prosecuted or penalized by the federal government. There are several criminal charges that can apply in tax crimes cases and each charge carries unique penalties.
Types of Tax Crimes
Entering false information on a tax return can result in several different criminal charges, ranging from relatively minor to very serious.
One of the most common charges related to tax offenses is late payment. Ordinarily, this charge is applied if a taxpayer simply neglects to pay their income tax by the due date. However, if someone intentionally misrepresents the amount of money they made in order to pay lower taxes, they may be charged with a late payment penalty.
If someone willingly submits fraudulent tax documents to the IRS, they may be charged with tax perjury. It is also against the law to help someone prepare or create a fraudulent tax return and can result in a charge of aiding or assisting tax perjury.
The most serious tax crimes charge is tax evasion. The difference between this charge and other less serious tax charges is the degree to which someone willfully tries to deceive the government. Corporations or individuals who deliberately avoid paying taxes can face serious penalties if they are convicted of tax evasion.
Penalties for Tax Crimes
Consequences for submitting fraudulent tax information can range from fines to prison time. Some penalties include:
- Late payment penalties on the amount of tax owed
- Interest penalties on the amount of tax that was underpaid
- 5 years in federal prison for felony tax evasion
- Fines of up to $250,000 for felony tax evasion
- A fine of up to $100,000 and 3 years in prison for tax perjury
Penalties for tax crimes can vary based on whether the alleged offender is an individual or corporation. Because corporations cannot be imprisoned, penalties for corporate tax crimes are steep fines. Also, self-employed individuals or contractors who must pay estimated taxes can face a year in jail or a $100,000 fine for submitting fraudulent tax information.
Dealing with Tax Fraud
Of course, the best way to avoid tax penalties from the government is to always provide accurate tax information and pay the appropriate amounts. However, even with careful preparation, mistakes can occur. Consulting with a criminal defense attorney who is experienced with tax law is a good way to find out how to respond to tax crimes charges.