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Can you go to jail for not filing taxes
It is important to respect the law. Not just tax but in other aspects as well. Not only is obeying law beneficial for us but disobeying can lead to significant penalties and the story is quite similar when it comes to filing taxes. The law facilitates important tax evasion penalties to discourage you from taking part in activities that can make you guilty of tax evasion or fraud. Besides financial penalization, a tax fraud jail can take several important years of your life away from you. Let’s dive into this concept of tax filing crimes in detail.
Tax Evasion: A federal crime
In an ideal situation, you would want to avoid the situation where you are searching online that either tax evasion is a crime or not. Furthermore, these felonies can stay on your criminal record which can cause difficulties for you in the future when finding employment, seeking education opportunities or starting your own business as well.
Coming to the question of whether tax evasion is a crime or not? Tax evasion is considered a federal crime according to section 7201 of the United States Internal Revenue Code. The following paragraph provides details about a couple of offenses that would be considered a federal tax crime if committed.
Firstly, a deliberate attempt to avoid or ignore the tax payment can be considered as a federal tax crime. For instance, holding of assets that have been filed in another person’s name or transferring assets to another person’s name to make sure that IRS(Internal Revenue Service) is not able to find their actual tax liability is considered as a deliberate evasion of taxes.
Secondly, the deliberate attempt of evading taxes can also be considered a federal tax crime. To elaborate this, a person has attempted to evade taxes by evading payment of a tax liability that is past due date of tax payment.
Jail Duration for a crime of tax evasion
The outcome of tax fraud is fines and ultimately going to jail. If you are proven guilty, you surely have to go to jail for evading taxes. This process however, does take a lot of time as the case will require the intervention of the court system but it is what it is.
There are a sequence of events involved before the IRS formulates a case for criminal prosecution due to evasion of taxes. This process mostly starts with the audit of a file tax return. Here, the IRS tends to look at the trends in a file return that can hint towards a willful evasion for quite a while, let’s say several years, and the inaccuracies tend to be consistent and significant.
It is also important to know that many taxpayers tend to face jail because of unreported income. This can be due to the reason for abandoning sizable transactions or entire incomes to reduce their tax liabilities willfully. Concealing records or providing false statements during the process of an audit is also quite an evident way to IRS auditors that this is a tax evasion felony.
When talking about tax evasion jail duration, that can vary depending on various factors. For instance, the amount of money involved and whether or not the person involved has shown tax evasive behaviour before. The sentencing guidelines of tax evasion also provide the relevant information regarding the duration of tax evasion jail time.
When it comes to taxpayers, they will only be entertained by the IRS audit penalties if the record indicates that they didn’t break the law deliberately. Therefore, having a sound tax audit representation is beneficial as the more skillful tax audit attorneys can assist the IRS in reaching for a better result for your case. This can save you from a long and vigorous trial.
If you are reading this article to find out if you will go to jail or not, then rest assured, just a failure to not file a timely tax return on its own is not sufficient enough to jail you for tax evasion. Those who are not filing their tax returns willfully will be subjected to a criminal prosecution. For your further guidance, here are some of the acts that can take you to jail for a tax evasion:
Hiding your side hustle income
Side hustle has become a part of our daily lives due to the ever increasing economical pressure. Therefore, it is important to report income from your side hustles as well as your main gig. For people who haven’t been declaring this in their taxes for several years, they are eligible for the IRS to view them as willful tax evaders.
Helping others to evade taxes
You can still be convicted of tax evasions even if you are not hiding your own sources of income. This can be done if you are helping or assisting others in terms of tax evasions. For this, section 7201 of the United States Internal Code Revenue states that an individual who helps others to evade tax liabilities will be prosecuted.
Neglecting to reveal offshore bank accounts
For Americans it is mandatory to pay the taxes on the foreign income generated. Hiding the foreign income in an overseas account can create difficult circumstances for you. If the IRS is successful in finding out that you deliberately failed to show these accounts, you are subject to significant fines and can even go to jail.
Duration of jail for tax evasion
For this it is important to know how a tax evasion punishment is estimated. The range is specifically mentioned in the federal sentencing guidelines so finding out the duration of your jail for tax evasion is dependent on those guidelines. This guidelines uses a numeric system that measures the sobriety of the offenses and the criminal history of the offender too.
There are 43 levels in total that depict the seriousness of the tax evasion offense. As a general rule, always remember that the seriousness of the crime determines the duration of your serving. Additionally, adjustments can be if the person accused does a guilty plea.
Furthemore, the criminal history of the person involved is also a determining factor in their serving duration in the jail. The sentencing guidelines are based on the phenomenon that the person who is a repeated offender must be given a more severe and longer duration. Furthermore, these guidelines are just to advise those involved and the actual power resides with the judge that is under the authority to formulate the sentence for the person accused.
Standard jail time for tax evasion
The basic jail time for tax fraud is anywhere between 3-5 years. The details of the case can be considered as a more determining factor in deciding the duration of the jail for tax evasion.
The lengthiest sentence for tax evasion
The lengthiest duration for tax evasion is 5 years.
Tax Evasion and Fraud Penalization
According to the law, the max penalization for a tax fraud is mentioned by that’s not all that you’ll need to pay once for evading tax charges. It all depends upon your circumstances, so you can be fined a lower or a max amount.
According to the law, you can be fined up to $100,000 and jailed for up to 5 years. The biggest fine for corporations is up to $500,000.
False Tax Return Penalization
The penalization for filing a tax return is of moderate severity than a straight evasion, but it can be significant enough for the people involved. People can be fined up to $100,000 for filing a fake return. Additionally, they can be sent to prison for a duration of three years. This is because this is a felony and comes under fraud.
Negligence to file penalty
Failure or negligence to file a tax return comes under a felony and the common evaluation leads to civil tax penalization against the taxpayer. But you can also be sent to jail for it. The penalization amount for every year you failed to file tax is $25000.
You can also be under criminal tax evasion charges for the failure of a tax return if it was due 6 years ago. If this is your case then you can’t be sent to jail for a year.
Wrapping up
There have been quite a handful of people that have been behind the bars due to tax evasion and they quite easily made the news. More importantly, there have been a lot of famous and rich individuals who have committed tax evasion felonies.
In any scenario, it is vital to consider tax professionals or a lawyer for defense if the situation is getting out of your control. For this, investing your money in a professional that knows about tax laws is quite important. This is because there are a lot of levels of tax crimes and they demand a lot of detailing. Therefore, investing in a good defensive strategy might be your best chance to at least reduce your serving duration.
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