Section 7201 of the Internal Revenue Code sets out the penalties for the willful attempt to evade or defeat any tax imposed under the I.R.C. The crime is classified as a felony, and a conviction could result in imprisonment up to five years and/or fines up to $250,000 for individuals or $500,000 for corporations.
If those penalties seem severe, what is perhaps even more surprising is the IRS’s track record of successful convictions in tax evasion cases. Many types of civil tax matters, such as the risk of an audit, are relatively low. In stark contrast, the chance of a conviction after being charged with tax evasion is quite high: According to a report by the U.S. Department of Treasury, the 2010 conviction rate was over 90 percent.
One reason for the aggressive enforcement might be the amount of money at stake. In the last decade, almost $3 trillion in tax revenues might have been lost due to tax evasion. In 2010 alone, the IRS might have lost an estimated $300 billion in revenues.
Like other criminal charges, tax fraud or tax evasion is first presented to a grand jury to decide whether there is probable cause to proceed to a criminal trial. Yet even in that preliminary forum, the IRS has a very high success rate.
The lesson to be learned is that if you are facing criminal tax charges from the IRS, it is important to consult with an attorney immediately. Behaviors such as filing a false income tax return, failing to file a return or committing some other type of tax fraud all might result in criminal charges.
Source: “Man Sentenced to Prison for Not Paying Federal Taxes,” copyright 2016, Baker Law Firm