Now that tax season is over, you may be worried about getting audited. Common mistakes, such as math errors, and red flags, such as filing a return as “self-employed,” make it more likely that you will be audited. Still, the IRS understands that the tax code is complicated and that people make mistakes. As a result, the IRS distinguishes mistake or negligence from tax fraud, as discussed in an earlier post.

Essentially, tax fraud comes down to the taxpayer’s intent. In other words, the IRS looks at whether the taxpayer willfully attempted to defraud the government by not paying taxes that he or she knows are due.

Tax fraud can take a number of different forms, including filing a false income tax return and intentionally failing to file a return. No matter the form, tax fraud is a very serious crime. A person convicted of committing tax fraud faces severe criminal and civil penalties. The penalties depend on the type of tax fraud.

Below are a few examples of possible penalties for tax fraud:

  • Attempting to evade or defeat taxes is punishable by a prison sentence of up to five years, a fine of up to $250,000 for individuals, or both plus the cost of prosecution.
  • Willfully failing to file an income tax return, supply information, or pay a tax is punishable by a prison sentence of up to one year, a fine of up to $100,000 for individuals, or both plus the cost of prosecution.
  • Making fraud and false statements is punishable by a prison sentence of up to three years, a fine of up to $250,000 for individuals, or both plus the cost of prosecution.
  • Attempting to interfere with the administration of tax laws is punishable by a prison sentence of up to three years, a fine of up to $250,000 for individuals, or both.

If you have been charged with tax fraud, you should speak with an experienced criminal defense attorney as soon as possible.