Penalty for Income Tax Evasion
Paying taxes is an inevitability, yet people still try to evade paying the Internal Revenue Service the money they owe each year. The penalty for income tax evasion will depend on the severity of the fraud.
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Identification
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Tax evasion is defined as using illegal means to not pay taxes. This includes lying on a tax return about money earned and overstating deductions listed.
Significance
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According to National Public Radio, tax evasion is widespread and in 2007 Americans owed about $345 billion more to the IRS than what they actually claimed and filed.
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Size
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According to IRSTaxAttorney.com, people are penalized if they substantially understate the amount of tax they owe. This means if they understate by more than $5,000 or 10% of the correct tax.
Function
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If you're guilty of not disclosing the correct amount of tax you owe, the IRS will penalize 75% of the underpayment tax on top of repaying the amount you owe, according to LifeTips.com.
Warning
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According to LifeTips.com, your penalty is based on the severity of the fraudulent information you disclosed. Penalties include court dates, repayment and even possible imprisonment.
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References
- Photo Credit tax forms image by Chad McDermott from Fotolia.com
