It is not a crime to make a mistake on your tax return. However, it is a crime to intentionally or willfully avoid paying the taxes that you owe to the government.
If you knowingly avoid paying taxes or deliberately pay less than you owe, the government may charge you with tax evasion. Before you can be found guilty of a crime or sentenced for a tax evasion conviction, the government must prove that you violated the law.
The Crime of Tax Evasion
The government recognizes two different ways a person may commit a tax evasion crime. You may be accused of tax evasion if the government thinks you:
- Evaded assessment. You must intentionally commit some act to lower the taxes that you owe. Examples of evasion of assessment include hiding income sources, overstating your deductions, or holding property in someone else’s name.
- Evaded payment. Once your tax bill is assessed, you may still be accused of tax evasion if the government asserts that you evaded payment by hiding money or assets that could be used to pay your tax bill. The government may accuse you of evasion of payment if it finds that you are hiding money in a relative’s bank account or a foreign account, for example.
The specific elements of the crime that the government must prove to get a tax evasion conviction are the same for evasion of assessment and evasion of payment crimes. Prosecutors must prove that you:
- Owed a tax to the government
- Performed an act to evade the assessment or payment of a tax
- Voluntarily and intentionally violated the law
Some examples of tax evasion include:
- Knowingly filing a false tax return
- Destroying records or keeping a separate set of books to evade tax assessment
- Hiding income
- Taking more deductions than you are legally allowed
Virginia Tax Penalties
If you are found guilty of tax evasion in Virginia, then the Commonwealth may sentence you to:
- Paying the tax that you owe plus a 100% penalty. For example, if you owed $5,000 in taxes, then you will owe the government a total of $10,000. The $10,000 includes the original $5,000 tax bill plus a 100% penalty of $5,000.
- A fine of up to $2,500. This fine is in addition to the tax bill and tax penalty. For example, if a 100% penalty was imposed on your $5,000 tax bill, then you now owe the government $12,500 for the original $5,000 tax bill, the $5,000 penalty, and the $2,500 fine.
- Jail time. Your sentence may include up to one year of jail time.
Federal Tax Penalties
Generally, the potential penalties for federal tax evasion include up to five years in prison, a fine of up to $250,000, and payment of all overdue taxes. Specific types of tax evasion may lead to specific sentences, however. This includes:
- Failing to file a tax return. In most cases, people face civil financial tax penalties for failing to file a tax return, but some people are sentenced to up to one year in prison and a fine of up to $100,000 for every year that they failed to file a return.
- Filing a fraudulent tax return. Generally, filing a fraudulent tax return is a crime punishable by up to three years in prison and a fine of up to $100,000.
- Mispresenting or hiding financial information. Concealing relevant financial information is a crime punishable by up to three years in prison and up to $100,000 in fines.
- Failing to pay taxes. The failure to pay taxes that are due is a felony punishable by up to three years in prison and $250,000 in fines.
What to Do If You’re Charged with Tax Evasion
Tax evasion crimes are often complicated. A conviction could lead to financial hardship, time in prison, and a permanent criminal record. Don’t let a mistake ruin your life. Instead, work with an experienced Fairfax criminal defense lawyer to untangle all of the financial aspects of your tax case and apply all possible legal defenses. Call our criminal defense law attorneys or contact us through this website today to learn more about your potential defense and to protect your future.