Tax Fraud IRS Penalties

Failure to pay and file taxes according to tax law comes with various penalties. One of the most serious, however, is tax fraud. The Internal Revenue Service (IRS) imposes much harsher penalties for tax fraud than for other offenses. Tax fraud can even result in criminal charges and time in jail. For regular tax collection, the IRS can only go back ten years. If the agency suspects you of tax fraud, however, there is no statute of limitations.

If you think you're under investigation for tax fraud by the IRS, don't wait to act. You should work to resolve this situation immediately. An experienced California tax attorney can help you understand your rights and your options when facing IRS tax fraud.

What Constitutes Tax Fraud?

Tax fraud is cheating on a tax return to avoid having to pay your total tax. It could involve falsifying information on your tax return, intentionally failing to file or to pay, or deliberately failing to report all income received. Tax evasion is also a form of tax fraud.

Tax Fraud Charges

When the IRS accuses you of tax fraud, you could face both civil and criminal charges. If it's a criminal case and the IRS recommends that you be prosecuted, the agency will hand your case to federal prosecutors, such as the Department of Justice.

Examples of tax fraud charges:

  • Willful failure to collect or pay over tax
  • Intentionally failing to file, withhold information, or pay a tax
  • Making a fraudulent statement to employees
  • Providing a fraudulent withholding exemption certificate
  • Giving false statements

Penalty for IRS Tax Fraud

The penalties for tax fraud differ for civil and criminal cases. Civil tax fraud penalties aren't as harsh as criminal ones.

Civil Penalties

The civil penalties for tax fraud are monetary only. The civil penalty for fraudulently failing to file a return is 15% of the tax due for each month it remains unpaid, up to 75% maximum. If you file a return and it's fraudulent, the penalty is 75% of the underpayment.

Criminal Penalties

Any willful attempt to evade or defeat taxes is a felony. Penalties for tax fraud of this kind can be up to $100,000 ($500,000 for a corporation) or up to five years in prison. Willful failure to file, pay tax, or keep sufficient records carries a fine of up to $25,000 for individuals and $100,00 for corporations. It could also get you one year in prison.

Can I Challenge Tax Fraud Penalties

If you're facing tax fraud penalties, you can dispute them. Mistakes on tax returns – without any fraudulent intention – happen all the time. Most people don't realize the IRS is investigating them for tax fraud until they receive a notice from the agency. If you didn't intend to defraud the government, you shouldn't have to face tax fraud penalties.

Help with IRS Tax Fraud

If you've realized that the IRS may be investigating you for tax fraud, you should seek the advice of an experienced tax attorney right away. Contact a California Tax Attorney to set up a consultation and discuss your options.

Tax Penalties

Contact Our Firm

I acknowledge that contacting California Tax Attorneys through this website does not create an Attorney-Client Relationship. Any information I send is not protected by the Attorney-Client Privilege. *(Required)

Contact Us Today

California Tax Attorneys is committed to answering your questions about IRS Offer in Compromise, IRS Audit & Appeals, IRS Installment Plan Agreement, California State Tax Issues, IRS Tax Levies/Liens, Payroll Taxes & Trust Fund Recovery Penalty, Unfiled Tax Returns, and Sales & Use Tax law issues in California.

We offer a free consultation and we’ll gladly discuss your case with you at your convenience. Contact us today to schedule an appointment.

The information contained in this website is provided for informational purposes only and may not reflect the most current legal developments, and should not be construed as legal advice on any matter. The transmission and receipt of information contained on this Web site, in whole or in part, or communication with California Tax Attorneys via the Internet or e-mail through this website does not constitute or create a lawyer-client relationship between us and any recipient. You should not send us any confidential information in response to this webpage. Such responses will not create a lawyer-client relationship, and whatever you disclose to us will not be privileged or confidential unless we have agreed to act as your legal counsel and you have executed a written engagement agreement with California Tax Attorneys. Contact a licensed attorney for advice on specific legal issues.

Copyright © 2025 California Tax Attorneys