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What are the penalties for tax fraud?

On Behalf of | Jul 21, 2016 | Tax Fraud & Evasion

If you make an honest mistake on your tax return, the Internal Revenue Service won’t attempt to send you to prison. While you may owe penalties and interest, you can put this behind you soon enough. However, there is another side of things. When a person willfully attempts to evade federal income tax, the IRS has the right to step in and take some pretty serious steps.

According to Title 26 USC § 7201 – an attempt to evade or defeat tax – a conviction can lead to penalties including:

— Imprisonment of up to five years.

— A fine not exceeding $250,000 for individuals and $500,000 for corporations.

— Both imprisonment and a fine.

There are many other titles that deal with other types of tax fraud. For example, Title 26 USC § 7202 is known as “willful failure to collect or pay over tax.” With this, the punishment is the same as Title 26 USC § 7201.

Title 26 USC § 7206(1) – Fraud and false statements – also comes into play. This carries a penalty of up to three years in prison, a fine not exceeding $250,000 for individuals and $500,000 for corporations or both.

As you can see, tax fraud is not something you want to mess with. With the IRS keeping a close watch, it’s always possible that you could be charged with a serious crime when you weren’t trying to hide anything.

If you find yourself in this position, you need to learn more about the criminal charge, including the potential punishment. From there, it’s a must that you defend yourself to prove that you did not willfully commit a crime.

Source: IRS, “Related Statutes and Penalties – General Fraud,” accessed July 21, 2016


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