What Are the Punishments for IRS Tax Evasion?

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When faced with tax debt, many people opt for the ‘easy’ solution — ignoring the problem and hoping it goes away on its own. Others attempt more evasive measures, such as concealing sources of income.

Fraudulent strategies rarely pan out. The IRS can be surprisingly forgiving for taxpayers who struggle to meet financial obligations, but only if they’re upfront. Those who take a more evasive route risk suffering the following penalties:

Fines

The IRS Tax Crimes Handbook defines tax evasion as a felony crime that carries potential fines of up to $250,000 for individuals — and up to $500,000 for corporations. Additionally, those found guilty of tax evasion may be liable for paying the costs associated with prosecution. These can prove surprisingly steep.

Jail Time

Although typically reserved for the most severe cases, jail can serve as a powerful deterrent for would-be tax evaders. The nation’s tax code allows for prison time of up to five years, in addition to the potential for fines as highlighted above.

In most cases, however, those deemed guilty of tax evasion serve less than the maximum of five years. Statistics from the United States Sentencing Commission (USSC) Datafiles highlights an average of just 17 months served following conviction. Interestingly, many offenders are sentenced to prison exclusively, rather than being forced to pay fines.

How Common Are Tax Evasion Penalties?

The penalties highlighted above are not commonly imposed, as the burden for proving willful evasion is surprisingly steep. According to USSC data, just 584 tax fraud offenders were identified in fiscal year 2017. Still, given the potential for jail time and significant fines, it’s crucial that taxpayers make every effort to avoid trouble with the IRS.

Don’t risk suffering harsh tax evasion penalties. With a tax resolution service in your corner, you can keep the potential for such actions to a minimum. The team at the Highland Tax Group can help — contact us to learn how.