If you are guilty of tax evasion, the statute in Internal Revenue Code section 7209 clearly states the consequences:
Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.
Whats worse than not paying your fair share of taxes? Not filing income tax at all. There are too many people who evade taxes, so the authorities dont want to put everyone of them in jail. But not filing income tax is sure to raise their ire even more than underpaying on a filed tax return. Make sure that you hire a
financial attorney to assist you with this. Here are some of the consequences of not filing income tax:
Fines and interest will be assessed. You can also get prison time, more for each year of not filing income tax.
The IRS will file a substitute return for you. So youre thinking, who cares, they do the work for me. The problem is that their return is based only on information that the IRS has from other sources. Therefore, it will not include any additional exemptions or expenses you may be entitled to and will probably overstate your real tax liability. Even if the IRS has already filed a substitute return, you can file your own return to make sure you take advantage of your exemptions and deductions. The IRS should adjust your account to reflect those correct figures.
Once the tax is assessed, the IRS will start the process of collecting. This can include placing a levy on wages or bank accounts or filing a federal tax lien against your property.