The IRS has a lot of power, and many taxpayers experience a little bit of fear any time they receive a letter from the IRS, even when they know that they are in compliance with their taxes. However, when you owe a significant amount of money to the IRS or haven’t filed your tax returns in years, another level of anxiety comes to play: fear that you might end up going to jail for tax evasion. Adding to that fear are news articles about celebrities and others heading to prison for not paying taxes. How much truth is there in that the IRS can put you in jail over your tax bill?

Not Paying versus Not Filing

If you simply do not pay your taxes, you will usually not end up in criminal proceedings or have to worry about jail. However, if you do not file your tax return, then you might end up having to worry about prison. Technically, the IRS can charge you for not filing a return, with you having to spend a year in prison for each year for which you did not file. However, the IRS is generally lenient with most cases, unless there is evidence that your failure to file has some criminal intent.

Criminal or Civil Misconduct

When it comes to tax proceedings, most cases of unpaid and even unfiled tax returns are civil cases, not criminal. In these cases, the punishment is usually fines or fees added to your tax liability, increasing your tax bill. If you continue to not pay, you will face punishment, but in the form of bill collection. This could become a tax lien or levy, which could see you losing your house or car to pay your tax bill. However, it will not see you facing a jail sentence.

However, if criminal charges are filed against you, then you might have to worry about a prison sentence. This happens in two main situations: tax evasion and tax fraud. In both of these situations, you must perform illegal actions knowingly to get out of paying your fair share of taxes. Not having the money or simply not filing usually does not constitute tax evasion or tax fraud.

Tax Evasion

The big two actions that will land you in jail are tax fraud and tax evasion. Tax evasion occurs when you knowingly decline to file your return or refuse to pay, even if you could afford to do so. This also includes performing illegal actions to hide assets and funds in order to evade paying the taxes on them.

Although technically not filing could land you with a charge of evasion, the IRS generally does not prosecute taxpayers who do so due to a mistake or inability to pay. If you voluntarily work with the IRS upon receipt of a tax bill or notice, then you can generally work out a deal that does not include criminal charges. However, if you continue to not file for several years, despite the IRS reaching out to you, then you might find yourself in hot water.

Tax Fraud

Tax fraud occurs when you knowingly lie on your tax return. For example, you claim dependents you do not have, leave out income you receive, include deductions or exemptions for which you do not qualify, or otherwise inaccurately fill out your form on purpose in order to lower your tax liability.

If you do any of these things by mistake, then you will not face tax fraud charges, as long as you once again work with the IRS and pay what you owe — or work out a deal to do so.

In Conclusion

In the U.S., you can only go to jail for not filing; not paying your taxes only leads to civil penalties, such as penalty fees. If you seem to have willfully and intentionally tried to get out of paying your taxes, then you might have to worry about criminal proceedings. If you make your income through illegal means, try to hide income from the IRS, or otherwise intentionally try to get out of paying your fair share of taxes, then the IRS might choose to threaten you with criminal charges.

Alternatively, if you respond to the IRS once they reach out to you and cooperate, then you will most likely not have to worry about jail. Furthermore, if you have filed your tax returns truthfully and accurately to the best of your knowledge, even if there are mistakes, then you do not have to worry about criminal charges, even if you never pay taxes. The vast majority of taxpayers, even those who are delinquent, do not have to worry about criminal charges or a jail sentence.

If you do have some back taxes and a hefty tax debt, then contact Fidelity Tax Relief. Our tax professionals will work with you to find a solution to your problem. You can negotiate for tax relief settlement options, such as Penalty Abatement, Offer in Compromise, Innocent Spouse Relief, and Currently Not Collectible Status. We will also help you set up an Installment Agreement so you can pay your debt over time. Call us today at 877-372-2520.

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