Taxes are an unfortunate but inevitable part of life. If you earn an income, you most like have to file a return and pay taxes on your earnings.
When life gets hectic, problems can arise with your tax returns or your ability to meet your tax obligations. Here is what you need to know about the criminal implications of failing to pay your taxes.
Simply being unable to pay your tax bill will not result in a criminal charge or jail time. However, you will still need to file a tax return every year. When you cannot afford to pay, you can often work out a payment plan with IRS.
Tax forms can be confusing, and it’s easy to make mistakes. Fortunately, honest errors on your return are not illegal.
Intentionally avoiding paying your taxes, also known as tax fraud, is a crime that can result in incarceration. Failing to file a return is punishable by up to one year in prison for each year you did not file. Using illegal means to avoid an accurate assessment of your tax obligation, called tax evasion, can lead to a maximum five-year sentence. Examples of tax evasion include:
- Underreporting your income
- Claiming deductions you do not qualify for
- Providing false records
Though you can serve time for the above actions, the IRS will often try to work with you first. If you have committed tax fraud, you may be able to avoid jail time by paying monetary penalties.