Some of our tax relief clients are concerned about the criminal implications of their case. They want to know how we plan on helping them dig their way out of their tax debt, but they also want to know if they are going to be able to avoid a criminal investigation or conviction. Some people (for various reasons) have multiple years of unfiled tax returns, and these are the clients who typically worry the most. The IRS calls these people “non-filers.”
Do non-filers have to be concerned about being prosecuted for tax crimes? Yes, they do.
Most people think of tax crimes as falling into one of the following categories:
- abusive tax schemes
- identity theft
- money laundering
- tax refund fraud
These are the types of tax crimes that get the most publicity. However, it is important to know that non-filers can go to prison too. The threshhold for “tax evasion” is lower than you might think. Of course the IRS does not have the resources nor the desire to prosecute every taxpayer who fails to file. In fact, most of the time, the IRS simply resorts to the Substitute for Return program rather than involving Criminal Investigation. But you can’t rule it out! The rule of thumb is to file your return every year, even if you know you aren’t going to be able to pay.