Can the IRS Really Put Me in Jail?

On: February 20, 2024

As if dealing with the IRS isn’t enough, now you heard someone say the IRS has the authority to put you in jail! Dealing with the IRS in any capacity can be scary and overwhelming. There is something about the agency’s reputation that instantly strikes fear in you when you receive a letter from them. Whether you have questions about the extent of collections the IRS can pursue or you have been notified by the IRS that you are under investigation, it is important to seek out the assistance of professional IRS tax experts who can explain what is going on and provide you with the guidance you need. Does the IRS Put People in Jail for Unpaid Taxes? They can. While not common, the IRS does have the authority to put taxpayers in jail, especially if they believe that the taxpayer has committed fraud. I Made a Mistake on My Tax Return – Do I Need to Be Concerned About Fraud? Unless the error was made on purpose with the intention to defraud the IRS, then you do not need to necessarily be worried about jail time or fraud. The IRS knows that mistakes happen and that is why they audit tax returns in the first place. If the IRS does find an error on your taxes and that error was careless or even just an honest mistake, you do not need to worry about any type of fraud charges. With that said, you will still be responsible for any associated penalties that come along with it. If you have made a careless mistake on your taxes, it is possible for the IRS to penalize you up to an additional 20% as a penalty fee. This can be quite a hefty financial charge and why it is important to work with an experienced tax professional to file your taxes. When the IRS deems that you have made a careless error or honest mistake on your taxes, your penalties will all be civil. These do not rise to the level of criminal unless they were done to defraud the IRS. What Are Some Examples of Fraud? The IRS can and has placed taxpayers in jail if they determine that a taxpayer is lying on purpose or including/omitting false information on their taxes. Some examples of fraud include:

• Claiming too many business expenses you do not qualify for
• Falsely claiming dependents
• Failing to report income (purposefully)

It is possible for the IRS to impose a civil penalty for fraud, which can be up to 75% added to your tax debt. In some cases, they may even criminally charge you. How Will I Know if the IRS Thinks I Committed Fraud? Fraudulent activity is usually uncovered during a tax audit. If the IRS agent performing the tax audit finds something suspicious during this time, they may question you further about it. Criminal investigations can arise in several different forms, and, in most cases, you are notified that you are being investigated. Chances are, the IRS will work with you to proceed with civil penalties over criminal charges, but it is important to work closely with a tax team should you find out you are being investigated at all by the IRS. Get Tax Representation from the Experts at Leading Tax Group  Whether a tax audit or a fraud investigation, dealing with the IRS is not something you should do on your own. Having a team of expert IRS tax professionals on your side can help protect your rights and assist you through the process. At Leading Tax Group, we provide you with aggressive, fair, and affordable representation in front of the IRS. From fraud accusations to late tax return filings, we handle all types of matters. Don’t attempt to fight the IRS on your own and reach out to our team today for a free tax consultation!