In Illinois, intending to evade taxes is a Class 3 felony if you owe $300 or more. That’s important to know because the last thing you want to face is a felony charge for your taxes.
Tax fraud and tax evasion are serious crimes to be accused of. The Internal Revenue Service (IRS) could accuse you of these crimes if the IRS believes that you have:
- Understated your income
- Made false claims for exemptions or credits
- Not reported taxable income
- Overstated your expenses
The IRS also believes that reporting personal expenses as business expenses is not lawful. As a result, if you try to report personal purchases as business expenses, you could face significant penalties.
How does the IRS investigate claims of tax evasion or fraud?
The IRS uses its own records, business records, bank records, undercover investigations, informants, technical surveillance and more to find out if you have been trying to avoid paying a fair portion of your income in taxes. The IRS also has up to six years from the date your tax return was supposed to be filed to bring criminal charges. Fines can be up to $25,000 for each tax year and can result in time in prison. You could face up to a year in prison for each year the IRS claims that you should have filed an appropriate tax return.
Tax evasion, as you can see, is serious business. If you’re being investigated or believe that you may be facing charges, it’s important for you to learn more about your rights. Our website has more on what you should do next if you want to try to avoid serious penalties and charges from the IRS.