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What are the consequences for tax fraud?

The Internal Revenue Service (IRS) and the United States Attorney’s Office are cracking down on tax fraud with serious criminal penalties. A conviction generally comes with required restitution payments to the IRS and victims with additional interest and penalty payments.

It is not uncommon for tax fraud convictions to come with jail time. Three recent examples from 2017 include:

  • Business manager: 6 years prison sentence. The government sentenced a business manager for a surgical center to six years of prison time and a required restitution payment of over $5 million. The government accused the manager of creating false invoices, embezzling funds from her employer, and failure to report these funds on her income tax return.
  • Business owner: 1 year prison sentence. The agency also accused a drywall business owner of failure to make payroll tax payments to the IRS. The court sentenced the business owner to over one year in prison and restitution of $216,304.
  • Business owner: 2 years prison sentence. The IRS accused a business owner that provided payroll services to businesses of failure to remit employment taxes. He was accused of embezzlement instead of using the funds to pay local, state and federal tax obligations. The court sentenced the business owner to over two years imprisonment and order him to pay $494,618.85 in restitution.

These types of convictions often begin with an audit from the IRS. Those who are the subject of an audit can take steps to protect their interests. Any business or individual that receives notification of an audit by the IRS or local state department of revenue is wise to seek legal counsel before responding to the notice.

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