Penalty for Federal Tax Refund Fraud

According to the Internal Revenue Service, penalties for federal tax fraud range from multiple years in prison to minor fines. The penalty for tax fraud depends on the extent of the crime and the tax preparer's level of involvement.

Disbarment

Tax preparers and accountants who are found guilty of tax fraud are often barred for life from preparing tax returns.

Prison

U.S. law states explicitly that any person who willfully evades payment of tax is guilty of a felony. According to the Department of Justice, punishment for a felony is punishable by five years of imprisonment.

Fines

The fine for federal tax refund fraud is up $250,000 for individuals and $500,000 for corporations.

Repayment

In a 2006 tax fraud case, two Florida tax preparers were ordered to return $772,449 they'd received in fraudulent refunds.

Considerations

In order to be indicted for tax fraud, the government must prove a taxpayer willfully evaded or failed to account for taxes owed. Mistakes and errors made on tax returns are not a basis for prosecution.

References

• Department of Justice
• Internal Revenue Service