Tax Evasion Penalties

Charlie S Oct 7, 2018
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Explained further are the different penalties for tax evasion which can be enforced by law on individuals defaulting on their tax payments.
Dealing with tax evasion has always been one of the most difficult challenges for governments all around the world. It is done by individuals belonging to different strata of society, and in different ways. As per various surveys and reports, there are many people who falsify their income details to the tax authorities to reduce the amount of liability.
Some others try to seek exemptions by deliberately going against the law. Apart from the people who file false or misleading tax returns, there are others who do not file them at all. Most of the governments across the world have declared these practices as illegal, and have categorized tax evasion as a serious offense.
Having a proper penalty is an attempt by them to curb these malpractices. These penalties have been decided after considering the seriousness of the financial crimes. They can help the government to recover maximum amounts in the form of tax and utilize the money for the benefit of the common public.


The Internal Revenue Service (IRS) has created a mechanism of recovering taxes from the defaulters. For cheating, the fine can be up to USD 250,000 and/or a prison sentence of up to five years. This can be imposed if the IRS pursues a felony conviction. There are strict laws to deal with those who file a false return.
Any person found guilty of such an offense can get a prison sentence of up to three years and/or a fine of up to USD 250,000. The penalties are also charged if the check is dishonored. The fine imposed can be up to two percent of the total amount on the check. You might not be penalized, if you can prove that your intentions were not negative.
The least serious crime is not filing a return at all. Any person found guilty of such an offense can be fined up to USD 100,000 and/or imprisonment of up to one year at the most.
Apart from those who do not pay their taxes, the IRS has to deal strictly with those who pay after the last date. Here, the fine is around five percent of the amount which the person needs to pay as tax for the year.


The system for recovery of taxes from public is very sound. There are many agents who work very professionally to investigate and check for such malpractices. There are times when surprise checks and investigations are conducted on several taxpayers to check if they have resorted to illegal means of seeking deductions or shown low income to pay less tax.
The bank accounts and the assets of any person found guilty are seized by the IRS. In most of the cases, the defaulters are provided time to pay off their pending dues, and the failure to do so can result in the auctioning off the assets to recover the amount.
Tax evasion is a crime, so it is best to follow the rules. If you are unable to file on time, request an extension through IRS. If you still owe taxes from previous years, it is best to pay off the debt as soon as possible. Even if you have not filed taxes in years, it is prudent to begin filing now, before omission is discovered. So, pay tax and relax!
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