Is Not Paying Tax a Crime?
Not filing tax returns on time and not paying tax are common issues for both personal or business taxes. Some people just get overwhelmed by the process, hold anti-government beliefs, or would rather pay the penalty than go through the work of filing taxes.
The IRS tries to encourage those not paying taxes to come forward voluntarily. This means that the penalties for tax evasion are not as severe for those who voluntarily come forward. Voluntary disclosure is also taken into account when setting payment instalment plans, tax liability, and criminal prosecution for tax evasion. If you are not paying taxes, then you need to read the following article to prepare.
The Basics of Tax Evasion
The key element that turns not paying tax into tax evasion is intent. It becomes a criminal violation when not paying tax is intentional. Criminals are often convicted of tax evasion because their earnings are illegal, and therefore, they do not report them. However, business owners and even celebrities have faced criminal charges for not paying taxes.
The IRS is unlikely to prosecute someone for not paying taxes if they made mistakes on their tax return or if their tax return was lost in the post. If you cooperate with the IRS and come forward voluntarily, then you are less likely to be prosecuted for tax evasion.
When Does Not Paying Taxes Become Tax Evasion?
Not paying taxes is a crime in its own right; however, the IRS will look favorably upon those who come forward voluntarily. Therefore, you are less likely to receive criminal charges for tax evasion, especially if your business is conducted illegally.
If your income comes from illegal sources, you should expect an investigation into your income, and there may be racketeering or fraud charges as a result. Any fraudulent activity will increase the likelihood of criminal charges for not paying taxes.
The IRS conducts random audits of tax returns to catch people not paying taxes. Most tax evasion or fraud is uncovered during these audits. You will be notified that the IRS believes you are not paying taxes and are conducting a primary investigation to determine if they should file criminal charges. This is the first step in a tax evasion investigation. The investigator will work with the IRS’s legal team to ensure the tax evasion case is enforceable if they discover any fraud.
What Are The Non-Criminal Penalties For Not Paying Taxes?
The IRS will often disregard tax returns from 6 years or more ago, and you will not be prosecuted for not paying taxes on those filings. But they may request older tax returns if their tax evasion investigation or audit requires more data. The IRS has programs that identify and keep an eye on those that are repeatedly not paying taxes. Note: the date you file your tax return is often the start date for statutes of limitations for collections or audits.
If you are not paying taxes, you can request a payment plan with the IRS for your tax debt or even negotiate a settlement. This is often decided on a case-by-case basis, depending on your income level and your history of not paying taxes.
Consider seeking the help of a professional to rectify not paying taxes. They will deal with the IRS on your behalf and calculate how much you owe and negotiate a payment plan for you. They will need access to your past tax records, which they will be able to get from the IRS in most cases. Depending on the severity of the case, not paying your taxes can be cleared up within a few weeks.