When you file your New Jersey tax return each year, it is important that you include all relevant information and report all income received during the tax year to the IRS. Failing to report all income received is among the most common reasons the IRS may decide to audit you. If the IRS does make the decision to audit you and decides you were guilty of tax evasion, you may have serious concerns about the possible penalties you may face.
Per H&R Block, while failing to report all income is a good way to trigger an IRS audit, the service may also decide to investigate you for tax evasion if you fail to file a tax return at all.
What might trigger an IRS audit
There are other actions the IRS may look for that also make it more likely to audit your tax return. Many people find themselves in trouble after failing to report income earned from a side hustle, such as a tutoring job. The IRS receives the same income statements you do, so if the IRS finds out you earned income through a side hustle but did not report as much, it may move forward with auditing you.
Whether jail or prison time is likely
While jail or prison time is certainly a possibility if you receive a conviction for tax evasion, it is not absolute. It also is not especially likely. In 2015, the IRS investigated an estimated 150 million taxpayers for allegations of tax evasion. Yet, only about 1,330 taxpayers received indictments.
To summarize, the chance of you having to go to jail or prison after an investigation for tax evasion is low. However, if the IRS does send you behind bars, you may have to be there for up to five years.