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Can you be criminally prosecuted for tax evasion?

On Behalf of | Oct 6, 2021 | Criminal Defense

As a resident of Dallas, Texas, you want to be a good citizen and follow the law, which includes paying your taxes. When people do not pay their taxes, it might be deliberate or an honest mistake. If you’re in either situation, you might wonder if you can be prosecuted for tax evasion.

How do people cheat on their taxes?

Tax evasion is a federal crime. However, in spite of what you might think, the chance of a person being prosecuted and convicted of tax evasion is very slim. The Internal Revenue Service states that around 75% of tax cheating is done by individuals, usually those who fall into the middle income range. The other 25% of tax cheating is done by businesses.

Who gets targeted by the IRS for tax evasion?

In most cases, individuals who are targeted by the IRS are not criminals but those who might make honest mistakes with their taxes. To avoid an audit by the IRS and the resulting penalties, most people do their taxes every year and turn them in on time. Many people fear that they can be prosecuted and sent to jail even if they make an honest mistake.

In reality, very few people are prosecuted and sent to jail for tax evasion. In most cases, the IRS will target those who understate what they owe in taxes. The following are usually signs of tax evasion and can lead to an audit:

  • Misreporting income, credits or deductions on taxes
  • Not filing a required tax return

Individuals who are unable to pay their taxes are usually not targeted by the IRS for criminal prosecution. Instead, the IRS will go after those who try to hide income and assets while they have the financial ability to pay their taxes.

What can lead to prosecution for tax evasion?

Per criminal law, in order for someone to be prosecuted for tax evasion, they must have knowingly and deliberately lied and misreported on their tax return. Errors are usually large and done over a period of years in order to constitute a pattern of criminal activity. The IRS looks for the following when considering prosecuting for tax evasion:

  • Unreported income: Unreported income is the biggest aspect leading to prosecution. Omitting things such as the sale of a business, income from a side business or even sources of income altogether is considered a red flag.
  • Odd behavior during an audit: Individuals who are guilty of tax evasion typically act odd during audits. The IRS is able to spot fraud through this unusual behavior.

If you are facing charges of tax evasion, you must take them seriously. You may need a strong defense in your case in order to avoid the harsh penalties of a conviction.