Tax Evasion Jail Time & Penalties

Tax Evasion Jail Time & Penalties

Tax Evasion

Tax evasion is when you willfully evade an assessment tax or evade the payment of tax. What does it mean to do something willfully? Willfully in law means to do something on purpose; you knew what you were doing when you decided to turn in a false report or decided to not pay your taxes. This is illegal.

Common tax evasion

  • Underreporting income,

  • Exaggerating tax deduction,

  • Claiming credits, you know you are not supposed to claim,

  • Hiding income,

  • Destroying tax records,

  • Filing false tax returns.

Tax Evasion Consequence

Federal Law

Under federal law section 7202, you can be found guilty of a felony if you willfully fail to collect or truthfully account for and pay any tax under the Code. A big consequence if found guilty is going to federal prison. You may be sentenced to prison for 3-5 years depending on a variety of factors. While it’s possible to avoid prison time, this is all on a case-by-case basis. You should consult an attorney to figure out the best course of action for you.

The federal prison sentencing guideline for tax evasion is based on a numeric system; there are 43 levels. Every offender’s calculation starts with their base offense level, between 3-36 depending on the seriousness of the crime. Then, your number can increase or decrease depending on a variety of factors like if you take a plea, your criminal history, and the amount of tax loss. After adding or subtracting the values to the base number, you will have a final number. On a chart, the final number will correspond to a certain time you will need to serve. The US government takes tax evasion very seriously and it is very possible for someone to go to prison for not paying or falsifying their tax returns.

To add to prison time, you can also be subject to penalties. The range depends on the facts of your case. There are cases where you do not need to pay anything, but there are also cases where the individual pays the maximum fee allowed, which is $100,000. For a corporation, the maximum is $500,000. This is just a range; offenders can be subjected to pay any amount within the range.

Some common penalty:

  • False Tax Return: a fine up to $100,000.

  • Failure to File: $25,000 for each year not filed.

  • Willfully Concealing Offshore Bank Accounts- up to $500,000.

  • In addition to penalties, you will be liable for restitution – meaning you will need to pay back the entire amount of tax that should have been paid plus interest.

California Law

Under California law section 19706, you can be charged with a felony or a misdemeanor. Depending on the facts of your case, the prosecutor will charge you with a felony if the offense you committed is a more serious fraudulent act. The discretion is up to the prosecutor and sometimes the judge.

Like federal law, you can be subjected to jail or prison time and/or fees. If you are charged with a felony, you can get 16 months, 2 years or 3 years in county jail or state prison. A prosecutor will usually ask for the highest amount of time. The amount of time you end up getting depends on the facts and circumstances surrounding your case, your criminal past, and other mitigating factors in determining sentencing in California. But if you get charged with a misdemeanor, you can still be looking at jail or prison time with a maximum of 1 year.

On top of prison or jail time, you can incur penalties. If you are charged with a felony, the maximum amount will be $50,000. For misdemeanor, the maximum amount is $20,000. If you are unable to pay back the tax or the penalties, the state will place a lien on your property until you pay the tax.

Closing Remarks

Dealing with a tax evasion charge is difficult and can be stressful. This post focused on criminal tax evasion charges. You can also be charged civilly, resulting in a significant penalty. Whether you are facing a criminal or civil charge, you should contact an attorney to create the best course of action for your case. The attorneys at Dallo Law Group are equipped with the necessary knowledge and skills to help you fight the charge. Contact Dallo Law Group today if you are facing a tax evasion charge.

Written By: Casey Hsieh