7 Potential Charges Resulting from an IRS Criminal Tax Audit

Criminal tax audits present substantial risks for both individual and corporate taxpayers. The Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ) can pursue criminal charges for a wide range of tax-related violations, many of which carry six-figure fines and years (or even decades) of federal prison time. Learn about seven potential charges resulting from an IRS criminal tax audit from Washington D.C. criminal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.

Common Criminal Tax Charges Against Individual and Corporate Taxpayers

When conducting criminal tax audits, the IRS looks for evidence of any and all potential violations of the Internal Revenue Code, Bank Secrecy Act and other pertinent federal laws. While audits can lead to an extremely wide range of charges, some of the most common criminal tax charges against individual and corporate taxpayers include:

1. Attempting to Evade or Defeat Tax

Willfully attempting to “evade or defeat any tax” imposed under the Internal Revenue Code violates 26 U.S.C. Section 7201. Companies found guilty of willfully attempting to evade or defeat tax can face up to a $500,000 fine, while individuals can face up to a $100,000 fine and five years of imprisonment.

2. Failure to Collect or Pay Over Tax

Willfully failing to collect or pay over any taxes owed to the IRS (i.e., the employee’s share of federal employment taxes) is a criminal offense under 26 U.S.C. Section 7202. Violations of Section 7202 carry up to a $10,000 fine and five years of imprisonment.

3. Failure to File a Tax Return

Willfully failing to file any tax return required under the Internal Revenue Code violates 26 U.S.C. Section 7203. Violations of Section 7203 carry up to a $100,000 fine for companies and up to a $25,000 fine plus a year of incarceration for individuals.

4. Preparing a False Tax Return  

Willfully preparing a false tax return is a federal crime under 26 U.S.C. Section 7206(1). Companies that prepare false returns can face up to a $500,000 fine, while individuals can face up to a $100,000 fine and three years of imprisonment.

5. Submitting a False Tax Return to the IRS

Submitting a false tax return to the IRS is a separate offense. In addition to facing prosecution for preparing a false return under Section 7206(1), taxpayers can also face charges for submitting a false return under 26 U.S.C. Section 7207. This tax crime carries up to a $50,000 fine for companies and up to a $10,000 fine plus a year of incarceration for individuals.

6. Failure to Disclose Offshore Assets

Taxpayers who fail to disclose their offshore assets in accordance with the Bank Secrecy Act can also face criminal prosecution in many cases. The criminal penalties for offshore disclosure violations depend on the specific circumstances involved.

7. Making False Statements to the IRS During a Criminal Tax Audit

Taxpayers can also face criminal charges for making false statements to the IRS during the criminal tax audit process. Under 18 U.S.C. Section 1001, making false statements to federal agents carries statutory fines and up to five years of federal imprisonment.

Request a Confidential Consultation with Washington D.C. Criminal Tax Lawyer Kevin E. Thorn

If you are facing (or if your company is facing) an IRS criminal tax audit, it is important that you speak with experienced defense counsel immediately. To request a confidential consultation with Washington D.C. criminal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 202-349-4033 or contact us confidentially online today.