The IRS reserves the right to bring criminal charges against people in Washington who willfully avoid filing or paying taxes.
There are a number of reasons that someone in Washington may neglect to file their taxes on time. Personal matters such as an unexpected illness or death in the family could get in the way. Professional stressors can be an issue, or perhaps the person is unable to pay and feels afraid.
Whatever the case may be, U.S. citizens are obligated to pay taxes. The IRS can technically prosecute someone for tax evasion, though those circumstances may be more rare than you would think.
Under the federal criminal tax manual, the following behaviors are illegal:
- Willfully failing to pay taxes
- Willfully failing to file a return
- Willfully failing to supply information
Should the IRS choose to bring charges against a consumer, the penalties could include a fine of $25,000 and imprisonment of up to one year.
Some common factors that may trigger an IRS investigation include someone whose income is derived from an illegal source or someone who has, year after year, repeatedly failed to file or pay taxes. As the IRS points out, an audit typically only involves the last three years of taxes. While the agency can collect any amount owed over any amount of time, it generally does not enforce filing taxes dated six years or older. The six-year statute is typically only applicable in situations in which someone has left out more than 25 percent of his or her income.
Avoiding a crime
The IRS will actually work with people to help them avoid criminal penalties in some cases. This is largely due to the fact that these investigations can take up a significant amount time and resources. It is important to point out the word "willfully" in the law. The IRS recognizes that people make mistakes, that returns do actually get lost in the mail and that sometimes, people simply miss deadlines.
For the most part, consumers who come forward voluntarily to acknowledge the mistake and take steps to rectify it will not face criminal charges. For example, U.S. citizens who live in other countries are expected to file and pay taxes. If someone hasn't paid those taxes, they could be potentially hit with a steep penalty. However, as detailed in a report from PBS, the IRS will actually waive those penalties if the taxpayer can demonstrate that he or she did not purposefully evade paying taxes and that it was a mistake.
People who are concerned about making their payments can set up a plan to pay in installments or reach a settlement for the tax debt. It is even possible that the IRS will owe the taxpayer money after the returns are filed, though the three-year statute of limitations applies to refunds in that any money owed to the taxpayer from returns older than three years may not be paid.
Tax matters can be overwhelming and complex. People who are concerned about issues such as this should speak with a tax attorney in Washington.