Updated April 2025
Can you really go to jail for not filing or paying your taxes? Yes, but only if you have not filed or paid in an attempt to evade taxes.
The IRS won’t send you to prison because you simply forgot to file your taxes or because you can’t afford to pay. The vast majority of people can get back into compliance with the IRS without ever worrying about threats like jail time or criminal charges. Tax crimes require willful attempts to evade the government – that’s much different than just not filing or not paying for a few years.
If you’re having trouble with the IRS, the best step you can take is to get professional legal help as soon as possible. Speak to our team at Wiggam Law today and enjoy the peace of mind that comes with guidance from genuine experts.
Key takeaways:
- You may face jail time for criminal tax fraud.
- Forgetting to file or not being able to afford your taxes is not a crime.
- Tax crimes involve willful attempts to evade paying tax or defraud the government.
- Criminal tax fraud penalties are up to $100,000 for individuals.
- Criminal failure to file charges can be up to $25,000.
What Tax Crimes Can Lead to Jail Time?
Tax fraud and tax evasion are the two tax crimes that could potentially lead to jail time or a prison sentence. Tax fraud is when you intentionally commit acts to avoid paying taxes. Tax evasion falls under the legal umbrella of tax fraud and refers to deliberately attempting to deceive the IRS to avoid paying or filing taxes you owe.
Failure to File Vs. Failure to Pay
Not filing a tax return can be classified as tax evasion, whereas not paying taxes is generally not considered to be a crime. If you don’t file a tax return, the IRS may pursue misdemeanor charges against you. Failure to file may sometimes escalate to felony charges, leading to significant fines and potentially jail time.
In contrast, the IRS will not pursue criminal charges if you file a return and don’t pay your taxes. Instead, the agency will apply penalties to your account and may pursue civil actions such as wage garnishments or asset levies to collect the tax if you don’t pay.
However, if you hide income or assets or if you falsify documents during the collection process, that may be considered tax fraud, and the IRS may pursue criminal charges against you.
What Happens if You Don’t File Taxes?
If you simply forgot to file for a single tax year or even a few years, that’s not a serious criminal situation. You’ll simply be asked to pay back those taxes plus interest and late filing/payment penalties.
However, if you don’t file in an attempt to evade taxes intentionally, you can face significant financial penalties and, in extreme cases, jail time.
Failure to file taxes isn’t necessarily considered a crime. However, you will accrue interest and penalties on top of requests to pay back the taxes that you owe, and the IRS may take involuntary collection actions against you. Whether or not you could be charged legally for failing to file depends on your situation’s particulars and, specifically, whether or not you intentionally didn’t file to evade taxes.
What Happens if You Don’t Pay Taxes?
If you fail to pay your taxes for a particular year or even several years, you’ll incur late payment penalties on top of the tax you owe. Again, the vast majority of cases are resolved by simply paying back the penalties and taxes you owe. The IRS will only pursue legal action if they suspect you are committing criminal tax fraud.
That said, the IRS can use a wide range of collection actions to recoup the money you owe them, including the seizure of assets and garnishing income. But even in these circumstances, the possibility of facing jail time is reserved only for serious criminal cases of tax fraud.
Criminal Tax Fraud Penalties
Criminal tax fraud or tax evasion charges can result in fines of up to $250,000 for individuals and $500,000 for corporations. Those convicted of these crimes can also face up to five years in prison per conviction.
Failing to file a tax return can lead to a fine of $25,000 for individuals or $100,000 for corporations. It can also lead to jail time of up to a year.
However, while you may face fines or imprisonment for committing tax fraud, that only happens if the IRS pursues a criminal judgment against you. More often than not, the IRS uses civil judgments to pursue taxes owed.
How Does the IRS Identify Criminal Conduct
The IRS detects tax fraud through reports from revenue agents (auditors) and revenue officers (collection officials). The agency also conducts investigative analysis to spot signs of fraud and accepts whistleblower claims from the public.
The agency reviews the information in a primary investigation before deciding whether to proceed with the case. After several levels of approval, the case is either terminated or placed in a “subject criminal investigation.”
During the investigation, a special agent looks at the facts and evidence involved to spot signs of criminal intent. They may interview third parties, conduct surveillance, subpoena bank records, or use other investigative techniques. They also work closely with the IRS Chief Counsel Criminal Tax Attorney.
Then, the investigation may be terminated, or if the IRS attorneys believe that there is a case, they will recommend prosecution. At that point, the case goes to the Department of Justice Tax Division or the US Attorney.
Civil Vs. Criminal Tax Fraud
The IRS doesn’t always recommend criminal charges for tax fraud. In many cases, the agency applies a civil tax fraud penalty instead. The agency also uses civil judgments to pursue people with unpaid taxes.
The civil tax fraud penalty is 75% of the unreported tax. For example, say you file a return that says you owe $50,000 in tax. The IRS audits your return and finds that you should have owed $150,000 in tax. Based on the facts of the case, the IRS decides to assess a civil fraud penalty – because you underpaid by $100,000, the penalty is $75,000.
What If You Committed a Crime – Voluntary Disclosure
If you have committed a tax crime, you may be able to reduce the risk of criminal exposure by participating in the Voluntary Disclosure Program. This program lets you get back into compliance, but to apply, you must contact the IRS before they contact you. This program is only for people who have committed tax crimes, and the IRS advises taxpayers to consult with a tax attorney before requesting a Voluntary Disclosure.
There are other options for people who simply forgot to file, made a mistake on their return, or have unpaid taxes.
FAQ
Who Goes to Prison for Tax Crimes?
Here are a few recent examples of people who were sentenced to prison for tax crimes:
- A man in Texas was sentenced to 30 months in prison for embezzling funds from his employer over a seven-year period and for filing a false tax return. He was also judged to owe almost $900,000 in restitution.
- Two Florida businessmen were sentenced to 18 months and nine months in prison, respectively, for attempting to evade over $1.1 million in income taxes.
- A Maryland security guard was sentenced to 24 months in prison for tax evasion, failing to report over $1.6 million in income tax between 2011 and 2020. He was also ordered to pay restitution of $219,167.
While it takes an extreme situation to end up with a criminal charge for tax fraud, these cases are not uncommon. The Tax Division of the Justice Department posts press releases regarding major criminal tax case results almost daily.
Can an Audit Lead to Jail Time?
Most IRS audits don’t lead to tax crime charges, but if the IRS discovers that you have committed tax fraud, they may apply civil fraud penalties or recommend a criminal investigation, which could lead to jail time.
Even if you face an audit and made some mistakes on your return, the IRS will adjust the return and assess the tax due. You’ll then be requested to pay the adjusted balance, or you can dispute the tax assessment within certain deadlines.
Can you go to jail for not filing taxes?
If you intentionally choose not to file to avoid paying taxes, yes.
Can you go to jail for not paying your taxes?
Yes, you can be imprisoned for failing to pay your taxes. However, for this to happen, the government must prove you acted with criminal intent. In most cases, you can avoid both civil and criminal charges by agreeing to pay back the taxes you owe, including any penalties issued.
Does IRS notice CP504 mean I’m going to jail?
IRS Notice CP504 does not mean that you are going to jail. Although this notice has more severe language than previous notices, it does not mean the IRS is pursuing criminal charges.
What if I report illegal income?
According to the IRS’s tax code, taxpayers must report all income, including that earned from illegal sources. For example, if you earn money from selling drugs or other illicit goods or if you embezzle from your employer, you are legally obliged to report that income.
But what happens if you actually report illegal income? The answer is it’s complicated. Generally, the rule is that you must report illegal income, but you don’t necessarily have to incriminate yourself by revealing its source.
Illegal income is obviously not likely to be reported, but if the IRS catches wind of your unreported income, you may be charged with tax evasion in a criminal court. For example, this is why Al Capone was sent to jail. He incurred criminal tax evasion charges for not paying income tax on his illegal income. You cannot use the Voluntary Disclosure Process if you have unreported illegal income.
What are the statutes for the IRS assessing civil tax fraud penalties?
If fraudulent, fake, or unfiled tax returns are involved, the IRS has an unlimited amount of time to bring forward charges.
The statute of limitations for tax assessment is usually three years after the date you filed your return, except for cases where more than 25% of your income was omitted from your return. In that case, the IRS has a statute of six years.
What is the statute of limitations for tax crimes?
The statute of limitations for tax crimes is six years. The clock starts on the last affirmative action you took to commit the crime so that the timeline can be subjective.
What if I’m self-employed and have never filed a tax return?
Normally, you’re only required to file a tax return if you earn over the standard deduction, but if you’re self-employed, you’re supposed to file any time you have over $400 in net self-employment income. If you forgot to file, a tax attorney can help you deal with your unfiled returns.
What if I can’t afford to pay my taxes?
Contact the IRS directly or reach out to a tax pro. A tax pro can help you request penalty abatement and a payment plan if necessary. If you cannot afford to pay the taxes due, they can help you apply for an offer in compromise settlement.
Getting Help with Unfiled & Unpaid Taxes
Unfiled and unpaid taxes can quickly become a heavy burden, both financially and mentally. If you’re worried about unfiled returns or unreported income or just made a simple mistake on a tax return, you may need legal help from tax professionals.
At Wiggam Law, we’ve got the expertise you need to help solve your tax issues without judgment. Call us at (404) 233-9800 or schedule a consultation to learn more. Our tax attorneys will help you regain your peace of mind and get back on track with the IRS.