Under the U.S. tax law, a tax crime occurs when a person has violated the following law: “[a]ny person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof…”. One who is found guilty of the tax crime “felony criminal tax evasion” shall be fined up to $100,000 for an individual and up to $500,000 for a corporation and/or face up to 5 years in prison. In addition, the convicted taxpayer of a FBAR tax crime will also be responsible costs to try the case. The two main types of tax evasion include: 1) the evasion of assessment and 2) evasion of payment of taxes. The evasion of assessment includes failure to file or filing a false instrument. Evasion of payment occurs after a tax is assessed by the IRS, and the taxpayer conceals assets available to pay taxes.
Under the US tax law, a taxpayer convicted of misdemeanor tax fraud charge is guilty of “[a]ny person required … to pay any estimated tax or tax, or required … to make a return, keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations…”. One who is found guilty of the tax crime “misdemeanor criminal tax evasion” shall be fined up to $25,000 for an individual and up to $100,000 for a corporation and/or face up to 1 year in prison. In addition to the fine and/or jail time, a misdemeanor-convicted taxpayer will also be responsible for the costs of prosecuting the case. Normally, with a misdemeanor conviction there is little chance of prison time for this type of tax crime.
Criminal tax evasion and committing tax fraud are serious offenses that carry serious consequences. The common thread in these offenses is willfulness. A taxpayer must intentionally act or refused to act where required for a tax crime to occur, but that is difficult to prove for all parties involved (the US Attorney and/or taxpayer, or State).