Regardless of what you may have heard, it is Constitutional to pay taxes. Unless you make less than the federal exemption amount, everyone is required to file a tax return with the federal government. If you are found guilty of intentionally failing to file your tax return, you can end up with harsh penalties that include prison time and around $100,000 in fines—and that doesn’t even include the prosecution costs. Recently, over half of the cases the IRS investigated for this very reason ended in a prosecution. Of those who were prosecuted, 78 percent were indicted and served an average of over three years in prison, as well as paying all the taxes and fees they owed in the first place.

How do these investigations even get started? Read on to learn more.

Alerts

The IRS offers a whistleblower program, which is the most common trigger for finding people who have not filed a tax return. This program gives people who report those who do not file a certain percentage of the taxes and fees owed once the prosecution is complete. Keep in mind, though, that this reward money is only given if the amount owed is over $2 million. The most common whistleblowers are business accountants or employees.

Random Audits

The IRS does perform random audits. They choose who to audit by finding a tax form, such as a W-2 from an employer or a business that does not offer any matching income reporting. Whoever is listed will be researched and located. Once they have been located, the IRS works diligently to contact this person and assist them in filing their taxes.

Of course, a random audit can dig up other things that can lead to a prosecution, including business who accept funds under the table, businesses that are not registered with the IRS, fraudulent EIN codes, and couples who are running an unregistered business by using their house to do so.

Associations

The IRS is now on the lookout for businesses or organizations, political or financial in nature, that claim they can help people avoid filing their taxes. These claims have been labeled by the IRS as frivolous tax arguments. Anyone found propagating these arguments are tracked down and prosecuted frequently.

IRS Tax Solution

Of course, regardless of the harsh punishments, the IRS doesn’t actually seek to prosecute everyone who hasn’t filed taxes. Their first step is always to educate people who have not filed and help them file if they do not know how. Keep in mind that if you receive a note from the IRS telling you that you have not yet filed your income tax return, you should absolutely file them immediately. If you don’t respond to this notice, it can result in interest on your owed taxes, fines, and a waiver of all your previous tax credits and deductions.

Refusing to file your taxes can result in some harsh penalties, and if the IRS wins the case, you will lose quite a bit—including your job and your freedom. That’s not to mention how much you will need to pay the IRS in fees, back-owed taxes, and legal costs. If that isn’t enough, your case will be published on the IRS website for everyone to see. If they reach out to you, it’s best to respond and resolve the matter as soon as you possibly can.

High Profile Cases

Both Willie Nelson and Wesley Snipes had rough cases with the IRS and suffered serious repercussions. Willie Nelson didn’t pay over $6.5 million in income taxes, and he ended up paying over $10 million in the end. He didn’t have the money to do so, so they IRS seized the majority of his property and sold it to pay for what he owed. Wesley Snipes was sentenced to three years in prison for intentionally not filing his income tax returns. He barely escaped felony charges because he was able to convince the court that he was told by a team of advisors that income taxes were illegal and that he didn’t have to pay them.

Naperville’s Tax Attorney

If you are in need of legal assistance when it comes to dealing with the IRS, look no further than Tax Law Offices. We are here to help you seek the best possible resolution for your case.