Being accused of tax evasion by either the state or federal government is not a charge to take lightly. There are a myriad of serious civil and criminal consequences for a taxpayer who is found to have violated tax evasion laws. Depending on the facts and circumstances of the tax evasion claim, you may face increased interest, fines, penalties, and even imprisonment for your actions. The time that has passed after your accused act of Tax Evasion occurs can also have an impact. Find out your states Tax Evasion Statutes of Limitations.
Types of Tax Evasion
Tax evasion takes many forms, and there are separate and distinct penalties, both civil and criminal, for each type of tax evasion under both state and federal law. While some types of actions with regard to the payment of taxes might be simple mistakes, other actions might constitute negligence or reckless disregard of tax laws to the extent that the consequences are much more serious.
Penalties for Tax Evasion
For instance, if you do not file your tax return by the due date, the Internal Revenue Service may assess you a failure-to-file penalty, which is 5% of the tax that remains unpaid each month, up to a maximum of 25% of your tax. Similarly, if you fail to pay your taxes when due, you may be subject to a failure-to-pay penalty, which is ½ of 1% of your tax for each month that remains unpaid, up to a maximum of 25% of your tax.
On the other hand, if you file a frivolous tax return, which does not provide adequate information with which to figure your tax, or shows an incorrect tax due, you may be assessed a $500 penalty. Plus, if you substantially understate your tax, such that the understatement is more than 10% of the correct tax amount or $5,000, whichever is greater, you may face a 20% accuracy-related penalty.
Civil and Criminal Tax Penalties
Other, more serious, civil penalties exist for failure to file a tax return due to fraud. In this case, the penalty would be 15% for each month that your return is late, up to a maximum of 75%.
Additionally, you may be subject to criminal and civil penalties for committing tax evasion, either through fraud, willfully failing to file a tax return, purposely failing to provide information to the IRS, or willfully failing to pay tax that is owed to the state or federal government.
The bottom line is that mere mistakes, or legitimate efforts to minimize your tax liability, do not amount to tax evasion punishable by civil and/or criminal penalties. However, if you intentionally act so as to avoid paying taxes that you owe to the local, state, and/or federal government, you may have committed tax evasion. It is also important to keep in mind that if you have acted so as to avoid paying both state and federal taxes, you may be charged under both federal and state law for tax evasion, which can result in double the civil and criminal penalties for your actions.
Hiring a Tax Attorney for Tax Evasion Help
As tax evasion charges can be quite serious, you should immediately contact an experienced tax and/or criminal defense attorney, or an attorney who specializes in white collar crime, in order to protect your rights. Only an attorney will be able to properly advise you as to your legal rights, as well as the likely success of the charges and/or any penalties that may result.