The average jail time for tax evasion ranges from 3 to 5 years. It varies on a case-by-case basis, but jail time for tax evasion occurs more often than one would think. What other penalties exist for tax evasion? According to the IRS;
“Any person who willfully attempts in any manner 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 fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.”
Clearly, the IRS takes tax evasion seriously.
Is Tax Evasion a Criminal or Civil Offense?
Tax evasion is a strictly criminal offense. It is easy to mistake tax evasion as a civil offense, as tax fraud and FBAR violations are typically considered civil offenses. As a criminal offense, the burden of proof is on the government to prove that the plaintiff is guilty “beyond a reasonable doubt.” The IRS can decide to pursue a civil or criminal investigation on some offenses; this does not include tax evasion, though.
Types of Tax Evasion
The IRS states that “evasion involves some affirmative act to evade or defeat a tax, or payment of tax.” People being accused of tax evasion are assured a trial before a jury, as said individuals must be charged with a crime in order to be found guilty. Here are a few examples of tax evasion practices:
- Failure to file returns
- Understating income/assets
- Overstating tax deductions
- Filing of false returns
- Sales tax fraud
- Failure to pay employment withholding taxes
Tax Evasion vs Tax Avoidance
Keep in mind that there is a difference between tax evasion and tax avoidance. With tax avoidance, individuals can lawfully mitigate tax liabilities using methods that have been approved by tax authorities—tax evasion is purely illegal.
If an individual willfully fails to report foreign accounts, then the IRS can potentially collect the full maximum balance of foreign accounts through a civil penalty. The IRS accomplishes this by penalizing the maximum balance by 50% numerous times over a multiple-year period. Criminal penalties may also be issued for FBAR penalties. These can result in more than $400,000 and potential jail time—similar to tax evasion.
How to Defend Against Tax Evasion Charges
You may be able to show that there was no intent to defraud the government if you are able to prove that there was a legitimate miscalculation of taxes. With proper guidance, it is possible to partake in tax resolution negotiations with the IRS or state tax authorities. It is always advised that you receive counseling from an experienced tax attorney who can help in creating a defensive strategy to bolster your case. At Brunoro Law, our tax attorneys have extensive experience in dealing with tax evasion; contact us today if you have any further questions on the matter.