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Tax crimes and tax fugitives – understanding the facts

On Behalf of | Mar 10, 2022 | Internal Revenue Service, Tax Crimes

It is common for people to try and find ways of evading taxes. After all, no one wants to pay a huge amount of taxes. However, state tax authorities and the IRS take tax evasion seriously. Below we take a comprehensive look at key facts on tax crimes and how the IRS deals with tax fugitives.

Who is a tax fugitive?

Individuals who flee when facing charges of fraud and tax crime are referred to as tax fugitives. These people run to countries that don’t have extradition treaties in the hope of avoiding jail time. However, the IRS keeps tabs on them to ensure they face justice for their crimes.

Have I committed a tax crime?

Using any illegal means to skip paying local, federal, or state taxes labels you as a tax evader. Typically, these tax crimes happen when businesses and individuals misinterpret their income to the local government and the IRS. You are liable to imprisonment and hefty monetary penalties if found guilty of tax crimes.

The main types of tax crimes

Most people commit tax crimes without realizing it. Among the most common types of tax crimes in the U.S. include the following:

  • Tax preparer fraud
  • Making frivolous tax crimes
  • Tax fraud scams
  • Offshore assets and income
  • Wilful failure to pay taxes

How are tax evaders caught by the IRS?

Taxpayers suspected of tax evasion or money laundering are actively monitored by a Criminal Division of the IRS. They use active programs responsible for flagging all possible tax crimes. Each of the programs has a particular target, thus making them extremely effective. Below is a quick look at these proactive IRS programs:

  • Abusive tax schemes
  • Corporate fraud
  • Abusive return preparer enforcement
  • Bankruptcy fraud
  • Gaming
  • International investigation
  • Financial institution fraud
  • General fraud investigation
  • Employment tax enforcement
  • Identity theft schemes
  • Healthcare fraud
  • Money laundering & bank secrecy act
  • Non-filer enforcement
  • Questionable refund program

Can I go to jail for tax crimes?

Yes, you can end up in jail for committing tax crimes – including filing the wrong taxes. It doesn’t matter whether it is intentional or not, the IRS treats tax evaders equally. However, you get 3 years to amend the wrong tax return, should you make a genuine mistake. Small mistakes in your taxes will lead to penalties and interest on unpaid tax portions. You will also have to pay deferred taxes.

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