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North Carolina Statutes Regarding Unpaid Taxes Due to Tax Evasion

North Carolina law mandates stiff criminal and civil penalties for individuals and tax preparers who attempt to defraud the state treasury through tax evasion. These laws, contained predominately in Chapter 105 of the North Carolina General Statutes (NCGS), do not apply to North Carolina residents who make honest mistakes on their taxes but do pertain to those who willfully attempt to or successfully defraud the state government.

  1. Considerations

    • Any North Carolina resident who attempts to willfully defraud the state through the evasion of taxes will receive a Class H felony per NCGS 105-236(a)(7). North Carolina bases sentencing upon the criminal history of the accused, mitigating factors and the discretion of a judge. A tax evader without a criminal record can receive between 4 and 8 months in prison for a Class H felony, according to My North Carolina Defense Lawyer.

    Tax Preparers

    • A tax preparer who helps clients evade taxes will receive a Class H felony for helping clients avoid taxes in minor instances, according to NCGS 105-236(a)(9a). In cases where a preparer helps clients evade more than $100,000 annually in taxes, the state of North Carolina will charge him with a Class C felony. Preparers who commit an offense under $100,000 may face a Class F felony. Sentencing guidelines for these offenses range from a minimum of 4 months imprisonment to a maximum of 210 months imprisonment, according to North Carolina Defense Lawyer.

    Time Frame

    • The state of North Carolina sets a statute of limitations of two years for criminal misdemeanors per Section 15-1 NCGS, but felony offenses, including tax evasion, do not feature a statute of limitations. Since the state can only audit tax returns three years after a taxpayer makes a filing, the state must prove that a taxpayer willfully evaded taxes or it cannot prosecute the taxpayer after this time frame.

    Interest

    • In addition to criminal penalties, a tax evader will have to pay back all owed tax monies with interest per Section 105-241.21 NCGS. The Secretary of the North Carolina Department of the State Treasurer sets an annual rate of interest between 5 and 16 percent per year on owed tax balances. This interest accrues from the date the evaded tax came due and compounds annually.

    Collection

    • After the state of North Carolina makes a determination as to the amount of tax and penalties owed as the result of evasion, the state can place liens against any property owned by the delinquent taxpayer and may also seize said property per Section 105-243 NCGS. In addition, the state can garnish the wages of the tax evader after providing notice, a process that removes regular sums from the evader's paycheck, according to Section 105-242.1 NCGS.

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