The Audit Process:

Prosecuted for Tax Fraud

Once the Criminal Investigation Division (CID) of the IRS has investigated you and they have recommended you to the Justice Department for prosecution, there are three crimes you may be charged with: tax evasion, filing a false return, or not filing a tax return at all.

Tax Evasion - Tax evasion is an intentional violation of the tax law. This is a pretty broad category and any cheating of the government in taxes can fall into this. Tax evasion is a felony offense and therefore a very serious crime. Being found guilty of tax evasion can carry with it up to a five-year prison sentence and/or fines totaling up to $100,000.

Filing a False Return - The crime of filing a false tax return can be charged if you have supplied the government with misleading or false information. In this case, the government does not have to prove an intent to evade only tax laws. They only have to prove that you filed a false return. Although considered a felony just as tax evasion is, the penalties carried with it are less severe. Punishment can consist of up to three years in prison and/or up to $100,000 in fines.

Failure to File a Tax Return - Not filing a tax return at all is the least serious of the three. This is a misdemeanor crime. The penalty of being found guilty of this tax crime is a maximum of 1 year in prison and/or fines totaling up to $25,000 for each year you chose not to file.

Once you are charged with one of these crimes, you may be arrested. If you are, you may be required to post bail or you may be released on your own recognizance. Once you have been charged, retain a tax attorney as soon as possible if you do not already have one. Your lawyer will need time to catch up on your predicament and make a case in your behalf. The IRS has already completed their investigation and has built a presumably strong case against you.