Federal law requires American taxpayers to report their employment, income and other tax obligations to the Internal Revenue Service (IRS) annually. Intentionally failing to satisfy these filing requirements can have severe consequences. In this post, we look at the penalties for knowingly failing to meet IRS tax obligations and possible options to resolve your case.

Criminal consequences of filing a false tax return

According to U.S. federal tax laws, if you intentionally submit or disclose a false return, account, statement or any other document, you may be criminally prosecuted on tax fraud charges in a court of law.

The penalties for intentional failure to submit correct tax information include:

  • $10,000 ($50,000 in the case of a corporation), one year jail time or both if you knowingly disclose any return, list, account, statement or other fraudulent documents
  • 10,000 ($50,000 in the case of a corporation), one year jail time or both if you knowingly furnish to the Secretary any fraudulent information

However, in such tax fraud cases, fines and penalties can increase significantly, depending on the false information provided and the duration of time it occurred. As such, you could potentially face more years in federal prison if guilty.

For example, this small business owner who pleaded guilty to knowingly filing false returns, having not reported a six-year associated income equaling $450,000 to the IRS, is facing up to three years in federal prison.

Legal options for resolving intentional tax law violation

If you knowingly violate federal tax laws by falsifying reports or otherwise and want to avoid criminal prosecution, your best option is to utilize the IRS CI Voluntary Disclosure Practice.

While this may not guarantee that you will receive automatic immunity from prosecution, a voluntary disclosure could help avoid a criminal prosecution case. However, a CI only applies if you knowingly violate federal tax laws and disclose the matter before facing an IRS audit or investigation.

In this case, a voluntary disclosure could help minimize your penalty and eliminate the risk of federal charges. Remember to consult your attorney to confirm whether you qualify for a voluntary disclosure or not.

If you intentionally file false returns, you could face severe fines, jail time or both. It’s easier to acknowledge your mistake through a voluntary disclosure before the IRS opens an audit or investigation.