The IRS considers some incorrect tax actions negligent, while other actions constitute fraud. An investigation will determine whether the agency will pursue criminal charges.
Review the federal laws about tax fraud and evasion.
The IRS may charge a taxpayer with evasion if he or she:
Usually, the IRS investigation will attempt to distinguish an honest mistake from a willful action. However, even errors carry a penalty of 20% of the underpayment amount.
Some of the indications of fraudulent activity include:
Penalties for tax fraud convictions vary based on the specific charge. Felony tax evasion carries up to five years in prison and a fine of up to $250,000. Making false statements to the IRS is also a felony and carries up to three years in prison and a fine of up to $250,000.
Failure to file or pay taxes as expected constitutes a misdemeanor offense. An offender could receive up to one year in prison and a fine of up to $100,000.
The IRS Criminal Investigation Department handles these cases, which usually surface after a tax audit or consumer tip.
For personalized legal guidance, call our office at 417-882-9300 or submit this form to schedule a meeting with an attorney.