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Tax Penalties 101: Understanding the Basics

It is important to be aware of the different tax violations in order for people to avoid committing them.

As a taxpayer of the Commonwealth of Massachusetts and the United States, most individuals, small businesses and large companies are required to file returns and pay taxes each year. For individuals, taxes may be withheld from their paychecks and sent to the government directly, and/or paid on a quarterly basis. Those who violate the tax laws may face serious penalties imposed by the Internal Revenue Service. This makes it critical for taxpayers to fully understand the types of penalties that can occur in order to avoid and/or minimize penalties.

Types of Penalties

Civil Penalties: The Internal Revenue Service (IRS) has various procedures in place for assessing civil penalties. The following list highlights some of the actions for which the IRS will impose a civil penalty:

  • Failure to file a return
  • Failure to pay
  • Failure to collect or pay over taxes
  • Failure to file certain foreign returns
  • Accuracy-related penalties
  • Substantial valuation misstatements
  • Civil tax fraud

Criminal Penalties: Special Agents of the Internal Revenue Service’s Criminal Investigation Division investigate criminal federal income tax cases. The following are some of the more common tax crimes:

  • Tax evasion
  • Willful failure to file a return
  • Willful failure to file certain foreign returns
  • Willful failure to collect or pay over taxes
  • Willful withholding violations
  • Fraud and false statements
  • Aiding and abetting
  • Fraudulent returns, statements and other documents

Speak with an Experienced Tax Attorney in Massachusetts

Failure to pay taxes or to follow the Internal Revenue Service (IRS) rules and regulations can result in serious civil and criminal penalties. An experienced tax lawyer can explain the possible penalties and advise you how to proceed. If you have questions about tax violations and potential penalties, contact Tax Attorney Gerard J. Levins, who is a former IRS Agent, and has more than 40 years experience dealing with IRS civil and criminal tax penalties.