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If you do not file your taxes, there are severe consequences. First, you risk forfeiting your refund if you don’t file. Refunds must be claimed within three years of the due date of the return, so if you have back tax returns that need to be filed, you can’t collect refunds past three years back. You also cannot collect tax credits past three years back. This includes credits such as the Earned Income Credit or the Health Coverage Tax Credit.
You can go to jail for tax evasion, and it is a federal crime classified as a felony. There are two specific offenses that can potentially constitute tax evasion at the federal level. Firstly, a willful act to evade a tax assessment is a federal crime. In other words, if an individual holds someone else’s money in their name, or transfers money out of their name to hide it from the IRS so that the IRS is unable to determine whose assets they actually are, they would be willfully evading a tax assessment. Secondly, a willful attempt to defeat a tax payment is a crime. If a person willfully evades or defeats their tax debt, they can be charged with a federal tax crime.
For the prosecution to convict someone of tax evasion, according to the law, they must prove beyond a reasonable doubt that there was a willful intent of the accused to evade or defeat their tax assessment or payment. There must also be proof that further tax is due by the defendant. In this case, an experienced Jacksonville IRS tax lawyer would be the most effective resource in minimizing the outcome of a case like this. With a strong defense and a firm understanding of tax law, an individual has many options to avoid jail time for simple tax crimes.
Jail time and fines are the consequences of committing tax evasion if convicted. It does take quite some time, though, for the case to go through the courts, but ultimately, the outcome could potentially be jail time. For the IRS to set up a criminal case against an individual, they must first initiate a tax return audit. When auditing a potential tax evasion case, the IRS looks for patterns that indicate willful evasion on returns dating from several years back. They also look for erroneous amounts that are significantly high or uncommonly low. Most taxpayers who are charged with a federal tax crime are charged, and face criminal prosecution, for unreported income with the purposeful intent of minimizing their tax liabilities. Purposely making false statements and hiding records amid an audit is a red flag for IRS representatives looking for a valid reason to prosecute.
The actual jail time someone convicted of tax evasion will receive depends on various factors in their case. How much money the defendant hid, what they lied about, how much money they owed, or whether the defendant is a repeat offender all affect the amount of jail time a convicted tax evader will face. There are minimum and maximum sentencing parameters. The average jail time for tax evasion is three to five years, with five years being the maximum sentence for basic tax evasion, though crimes like tax evasion via money laundering will be sentenced for much longer.
Failure to file your tax return is not tax fraud or tax evasion. It is a misdemeanor crime, though, which can result in up to one year of time in jail. In addition to jail time, you could also face severe penalties that can be as much as $25,000 for each year you didn’t file. In some cases, an IRS penalty abatement is a possibility, which would forgive you of penalties one time, but you would need to speak to a qualified tax attorney to discuss if this is an option for your case and how to apply for it.
If a taxpayer’s tax return is more than 60 days past due, a minimum penalty for late filing will apply. The failure to file penalty is based on how late the tax return is filed (extension dates do not apply) and the amount of the owed tax debt, not to exceed 25% of that year’s owed taxes.
The standard deduction rates have increased. The standard deduction raises by $900 to $13,850 for married individuals filing separately and single taxpayers. The heads of households will receive a $1,400 increase from last year for a standard deduction of $20,800 on their 2024 federal income tax returns.
You can go to jail for tax evasion or tax fraud. However, you must be charged with the crime, prosecuted, convicted, and sentenced to incur criminal tax crime jail time. While this is a long process, it is a potential consequence of not filing taxes, which would constitute tax evasion.
If you don’t file your taxes in Florida, it is a crime. The IRS, however, would rather not file charges against simple tax evasion. Instead, they would rather work with you to set up a payment plan to pay off your tax debt rather than spend more money on court fees and lawyer costs to take you to court and file charges against you. They would also rather seize your property and bank accounts as well as garnish your wages and your tax refunds.
If you are worried about going to jail for not filing your taxes, there are ways to alleviate the stress and resolve the issues without going to jail. Contact TaxSmith, LLC, to determine the most ideal solution for your back tax debt, and stop worrying today.
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