Tax evasion is a serious crime that can have severe repercussions for those guilty. It is also one of the most challenging crimes to detect and prosecute. This blog will take a comprehensive look at and answer the age-old question: is tax evasion a felony or a misdemeanor?
Understanding the Distinction Between Felony and Misdemeanor Tax Evasion
The distinction between felony and misdemeanor tax evasion is essential to understand. A felony is generally defined as a crime punishable by imprisonment of more than one year or death. A misdemeanor is defined as a crime that is punishable by imprisonment of less than one year.
In the context of tax evasion, a felony charge is generally applied when the accused has willfully attempted to evade a large amount of taxes or has committed multiple acts of evasion over some time. The Internal Revenue Service (IRS) is the primary agency enforcing tax laws.
It is the one to determine whether a tax evasion case is a felony or misdemeanor. The IRS has established parameters that help it determine the severity of the offense and the penalty that should be imposed.
Potential Penalties for Felony Tax Evasion
In the United States, the punishment for felony tax evasion is determined by the federal government and the specific details of the case. Depending on the severity of the offense and the amount of taxes evaded, the offender may face any of the following five potential penalties. Here are the possible penalties an individual incurs:
- Fines: Fines are the most common penalty that can be imposed on an individual convicted of felony tax evasion. The fine will depend on the amount of taxes that were evaded and the severity of the offense. Generally, a fine will be imposed in addition to any other penalties that may be imposed.
- Restitution: Restitution is a form of compensation ordered by the court to make the individual who committed the crime financially responsible for evading taxes. This restitution must be paid in full before any other penalty can be imposed.
- Prison Time: Prison time is the most serious penalty that can be imposed for felony tax evasion. Depending on the severity of the offense and the amount of taxes that were evaded, an individual may face up to five years in prison. Sometimes, the prison sentence may be longer if the individual has a prior criminal record.
- Probation: Probation is an alternative to prison time and allows the individual to remain in the community, either under the supervision of a probation officer or on their own. The length of the probationary period will depend on the severity of the offense and the amount of taxes that were evaded.
- Home Confinement: Home confinement is another alternative to prison time. It allows the individual to remain in their home while being monitored by a probation officer. The length of the home confinement period will depend on the severity of the offense and the amount of taxes that were evaded.
Potential Penalties for Misdemeanor Tax Evasion
The government takes this offense very seriously because it involves the unlawful avoidance of paying taxes, which can severely impact the economy. In the United States, tax evasion is considered a misdemeanor and can result in hefty fines, imprisonment, and other penalties. Here’s how they differ:
- Monetary Fines: Monetary fines are the most common penalty for misdemeanor tax evasion. F fines can range from a few hundred dollars to tens of thousands depending on the circumstances. In some cases, the court may also order the tax evader to pay restitution, money paid to the IRS to make up for the unpaid taxes.
- Probation: Probation is a standard penalty for misdemeanor tax evasion and is usually imposed in addition to a monetary fine. Probation typically lasts one year and involves the court monitoring the tax evader. During this time, the tax evader must adhere to certain conditions, including paying taxes on time and not engaging in other criminal activities.
- Imprisonment: Depending on the severity of the crime, a tax evader can face jail time for misdemeanor tax evasion. The amount of jail time varies depending on the circumstances, but it can range from a few months to several years.
- Suspension of Driver’s License: In some cases, the court may suspend the tax evader’s driver’s license for some time. This penalty is often imposed in addition to a monetary fine and/or probation.
Denial of Tax Refunds:
The IRS may also deny the tax evader any future tax refunds for a period of time. This penalty is typically imposed in addition to other penalties.