What happens if you’re found guilty of tax fraud? What kind of fines and jail time can be imposed?  There are civil fraud penalties or fines, and there are tax crimes.Tax crimes include filing a false tax return, tax evasion, filing false documents, failure to collect employment taxes, failure to pay taxes, and failing to file a tax return. The penalties for criminal tax fraud are harsh and serious. They can go up to 5 years in jail, plus fines of up to $500,000, plus the costs of prosecution for each separate tax crime.

Once the criminal tax case is completed the IRS Criminal Investigation unit will refer the case back to the IRS Examination Division where the taxes will be assessed. At this point the IRS can be expected to add on the civil tax fraud penalty, on top of any criminal tax fraud fines. Clients sometimes ask, “What is the difference between tax fraud, and a simple mistake?” Generally tax fraud or tax evasion involves an intentional wrongdoing. Mere carelessness is not tax fraud.

Here are the punishments and fines
and the kinds of tax crimes:

Attempt to evade or defeat tax 26 USC § 7202

Any person who willfully attempts to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof:

• Shall be imprisoned not more than 5 years
• Or fined not more than $250,000 for individuals ($500,000 for corporations)
• Or both, together with the costs of prosecution

Willful failure to collect or pay over tax

Any person required under this title to collect, account for, and pay over any tax imposed by this title who willfully fails to collect or truthfully account for and pay over such tax shall, in addition to penalties provide by the law, be guilty of a felony

• Shall be imprisoned not more than 5 years
• Or fined not more than $250,000 for individuals ($500,000 for corporations)
• Or both , together with the costs of prosecution

Title 26 USC § 7203

Willful failure to file return, supply information, or pay tax

Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return, keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof:

• Shall be imprisoned not more than 1 years
• Or fined not more than $100,000 for individuals ($200,000 for corporations)
• Or both, together with cost of prosecution

Title 26 USC § 7206(1)

Fraud and false statements

Any Person who… (1) Declaration under penalties of perjury – Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter; shall be guilty of a felony and, upon conviction thereof;

• Shall be imprisoned not more than 3 years
• Or fined not more than $250,000 for individuals ($500,000 for corporations)
• Or both, together with cost of prosecution

Title 26 USC § 7206(2)

Fraud and false statements

Any person who…(2) Aid or assistance – Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the Internal Revenue laws, of a return, affidavit, claim, or other
document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to
present such return, affidavit, claim, or document; shall be guilty of a felony and, upon conviction thereof:

• Shall be imprisoned not more than 3 years
• Or fined not more than $250,000 for individuals ($500,000 for corporations)
• Or both, together with cost of prosecution

Title 26 USC § 7212(A)

Attempts to
interfere with administration of Internal Revenue laws

Whoever corruptly or by force endeavors to intimidate or impede any officer or employee of the United States acting in an official capacity under this title, or in any other way corruptly or by force obstructs or impedes, or endeavors to obstruct or impede, the due administration of this title, upon conviction:

• Shall be imprisoned not more than 3 years
• Or fined not more than $250,000 for individuals ($500,000 for corporations)
• Or both

Title 18 USC § 371

Conspiracy to
commit offense or to defraud the United States

If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each:

• Shall be imprisoned not more than 5 years
• Or fined not more than $250,000 for individuals ($500,000 for corporations)
• Or both

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If you get an audit letter and you know that you have committed fraud then you need a lawyer to help you at the very beginning and all the way through.

Experience counts in law. John Ellsworth has been licensed for over 37 years.

“You literally saved my life,” said one man for whom a prison sentence would have meant certain death. “I wouldn’t have seen my children again for 25 years,” said another man whose charges were extremely serious. “Thank you for saving my business,” countless other clients have said, happy to retain their businesses and business interests after
their cases were resolved. “I would have lost my job and maybe my family if I couldn’t continue in my work,” said one woman.