Can You Go to Jail for Unpaid Taxes to the IRS?

If you have fallen behind on your taxes, it’s natural to worry about the potential legal ramifications of non-compliance with your statutory duty. It’s crucial to understand that the risk of imprisonment only exists when there is an intentional commission of a tax crime. This means having arrears in tax payments due to financial hardships or making an honest mistake on a tax return is not criminal and will not result in time behind bars. Please continue reading to learn what the Internal Revenue Service (IRS) can send you to jail for and how a qualified Rockland County Criminal Defense Attorney can help protect your freedom. 

When Can You Go to Jail for Not Paying Taxes?

Firstly, it’s imperative to understand that for the IRS to pursue criminal charges against you, they will have to prove that you are guilty of either tax evasion or tax fraud. While these terms may be used interchangeably, there are key differences. Tax fraud applies when a tax document has been intentionally falsified. Tax evasion, conversely, involves deceiving the IRS to reduce tax liability. It’s also illegal to help someone evade their taxes. If you help someone evade their taxes, you will become an accessory to the crime.

Is Tax Avoidance a Crime?

It’s important to note that tax avoidance is legal. It occurs when a person takes steps to reduce their tax bill that are not prohibited by law. This may include claiming deductions for which they are eligible or structuring the ownership of your business in a specific way to reduce your tax liability. Ultimately, you will only go to jail if you deliberately evade your taxes or intentionally falsify tax documents.

What is the Statute of Limitations for Criminal Charges?

When an IRS tax audit determines you owe money, the IRS will take the necessary steps to collect the taxes due. If they determine you intentionally underpaid your taxes, you could be subject to a civil tax penalty of 75% of the underpayment that is attributed to your fraud. As long as you cooperate with the IRS and demonstrate a willingness to resolve your tax problems, it’s unlikely you will face criminal penalties. However, tax evasion and tax fraud are both serious criminal offenses. Therefore, you will likely face a prison sentence of up to five years and fines of up to $250,000 for individuals and $50,000 for corporations.

If the government plans to file criminal charges against you for failing to pay your taxes, there is a limited time for doing so per the statute of limitations. There is no statute of limitations if you face civil tax fraud charges. However, if you omit more than 25% of your income, the IRS typically has six years to file criminal charges against you for a tax violation. The timeframe will depend on the nature of the alleged wrongdoings.

If you have failed to pay your taxes, please don’t hesitate to contact a trusted attorney from the Law Office of Carl Spector, who can construct a dynamic legal strategy to help you avoid criminal penalties.