Tax fraud: Serious penalties at the state and federal level

On Behalf of | Oct 6, 2021 | Tax Crimes

Tax fraud includes when a business or individual willfully and intentionally submits false information on a tax return. They do this to avoid tax obligations.

Some common kinds of tax fraud include making false deductions, using a false Social Security Number (SSN) or failing to report their income.

The federal penalties for tax fraud

There are both state and federal penalties that you could face for tax fraud. The penalties that you will face will depend on the kind of fraud that was committed. For example, the government may pursue penalties such as fines of up to $250,000 and imprisonment for up to five years against someone convicted of evading taxes. For businesses that attempt to evade taxes, the penalty may increase to $500,000.

Making false statements when committing fraud may result in penalties of up to three years in prison and fines of up to $250,000 for individuals or $500,000 for corporations.

Willfully failing to pay taxes when due or file a return may also lead to a conviction with penalties such as imprisonment for up to a year and $100,000 in fines for an individual. Corporations may face fines of up to $200,000.

State penalties for tax fraud

In Connecticut, you could also face penalties for tax fraud. Those penalties may include:

  • Fines of up to $1,000 for tax evasion
  • Fines of up to $5,000 for willful tax violations
  • Jail time ranges from one to five years

It is very important that you do have a defense in place if you are accused of willfully violating the state or federal government’s tax laws. This is because there is a real risk that you could face thousands in penalties on top of imprisonment.

Can you face state and federal charges for tax fraud at the same time?

Yes, which is why it’s so important to defend yourself right away. There is a significant difference in how fraud cases are handled compared to cases where you made a mistake on your return, so taking time to defend yourself and to fight the Internal Revenue Service may be the right choice.