Tax evasion is defined as the purposeful illegal attempt of a U.S. citizen to evade assessment or payment of a tax imposed by the federal government. The organization that oversees taxes, the Internal Revenues Service, is in charge of investigating those who attempt to evade paying. According to estimates, the federal government loses billions of dollars in potential revenue to
Penalties
If you are caught and convicted of tax evasion, the federal government can impose some of the following sentences:
Up to 5 years in prison
- Up to $250,000 in fines ($500,000 for corporations)
- Both in addition to the cost of prosecution
Additionally, any unpaid balance of taxes will accrue interest, which includes a failure to pay a penalty of 0.5% on the unpaid amount each month it is unpaid, and a tax evasion fraud penalty of 75% of the unpaid tax; this interest is all collectable by the government and must be paid in addition to the penalty fines.
Investigation
The IRS will carry out investigations to determine whether or not someone may be guilty of tax evasion, including looking into books, records, and financial papers. While they do investigate charges, including those submitted to the IRS whistleblower award program, they do not prosecute financial crimes. The IRS is only capable of imposing monetary penalties and require payment of proper taxes due. They typically investigate suspicious financial activity by conducting randomly selected audits to estimate total noncompliance.
The IRS has the full power of the government behind it whenever the organization finds someone who may not have paid their taxes. IRS investigators will conduct a thorough research into your financial affairs. In order to avoid saying anything incriminating, have IRS agents talk to your lawyer or have your attorney present if they need to question you.