Receiving a notice from the IRS can be daunting, particularly with the fear of possible arrest and jail time for tax-related offenses. This guide explains the differences between civil and criminal tax offenses and outlines the potential penalties for unfiled tax returns.
Civil IRS Offenses
Civil penalties by the IRS are more common than criminal actions. They include fines for failing to file tax returns or for underpaying taxes. While these penalties can be severe, they usually do not lead to jail time. The IRS understands that financial hardships can prevent timely payments and seeks to collect the owed amount through financial penalties and, in some cases, enforcement actions like wage garnishments or property seizures.
Penalties for Civil Offenses
- Failure to Pay: Incurring a monthly penalty of 0.5% of the unpaid tax, capping at 25% after 50 months.
- Failure to File: A higher penalty rate of 5% per month of the unpaid tax, maxing out at 25%.
Criminal IRS Offenses
Criminal offenses include tax fraud and tax evasion, where intentional misconduct to avoid paying taxes is evident. These offenses can carry significant penalties, including imprisonment for up to five years per offense. The IRS bears the burden of proving intentional fraud or evasion, which is a higher threshold than for civil penalties.
Getting Professional Help
Navigating tax laws and IRS requirements can be complex. If you’re dealing with unfiled tax returns or unpaid tax debts, consulting with an experienced tax professional from Fiore Tax Resolution can provide guidance and representation before the IRS. We can assist in negotiating payment plans or Offers in Compromise to resolve tax issues without the severe consequences of criminal charges.
Contacting a tax resolution professional can provide peace of mind and strategic solutions to address unfiled tax returns and avoid the potential for harsher penalties.
