The IRS has a Criminal Investigation function whose mission is to encourage and achieve the highest possible degree of voluntary compliance with tax laws. Criminal Investigations can be initiated from information obtained from within the IRS or from the public as well as from ongoing investigations underway by other law enforcement agencies. Various investigative techniques are used to obtain evidence, including interviews of third party witnesses, conducting surveillance, executing search warrants, subpoenaing bank records, and reviewing financial data.
Any person required under the Internal Revenue Code to pay any estimated tax or tax, or required by the Code or by regulations to prepare a return, keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required, is, in addition to other penalties provided by law, guilty of a misdemeanor and, upon conviction thereof, can be fined not more than $25,000 ($100,000 in the case of a corporation), or imprisoned not more than one year, or both, together with the costs of prosecution. Many celebrities have done time in jail for not filing taxes, most notably actor Wesley Snipes. This is in addition to the Failure to File Penalty of up to 25% of the balance owed.
Any person who willfully attempts in any manner to evade or defeat any tax under the Internal Revenue Code or the payment thereof is, in addition to other penalties provided by law, guilty of a felony and, upon conviction thereof, can be fined not more than $100,000, or imprisoned not more than five years, or both, together with the costs of prosecution. This is most commonly seen in hiding money offshore and payroll tax diversion. Additionally, a Fraudulent Failure to File Penalty of up to 75% of the tax owed may be asserted by the IRS.
The IRS has one of the highest conviction rates in federal law enforcement. In addition to serving substantial prison sentences imposed by the courts, those convicted must also pay fines, taxes, civil penalties, and, frequently, court costs. If you suspect you may be facing an IRS Criminal Investigation, please contact an D.C. Criminal Tax Attorney to protect your rights.