Can You Face Criminal Charges for Not Filing a Tax Return?

Failing to file a tax return is a serious issue that can lead to IRS penalties, but did you know it can also result in criminal charges? The IRS does not take non-filing lightly, particularly when it involves willful failure to file taxes. In this post, we’ll break down when not filing taxes can lead to criminal consequences and how you can avoid these risks.

What happens if you don’t file your tax return?

There is a critical difference between not filing your tax return and filing false tax returns. While filing a false return involves intentionally submitting incorrect information, failing to file a return can still result in severe penalties, including criminal charges.

Willful failure to file taxes

Under Section 7203 of the Internal Revenue Code, taxpayers who willfully fail to file their tax returns can face criminal charges. These charges may include:

• Up to one year in prison
• Fines up to $25,000 for individuals ($100,000 for corporations)

Civil vs. Criminal penalties for not filing taxes

For most taxpayers, the IRS will first apply civil penalties for failing to file taxes. This typically includes fines and interest on unpaid taxes. However, if the failure to file is determined to be willful—meaning the taxpayer intentionally chose not to file—the IRS may pursue criminal prosecution.

When does not filing taxes become a criminal issue?

The IRS is more likely to pursue criminal charges if there is a pattern of willful non-filing. Key factors include:

• Significant income that should have been reported
• A history of avoiding tax filing obligations

If the IRS determines that the failure to file was deliberate, criminal penalties could apply.

Final Thoughts

If you fail to file your tax return, you’ll likely face civil penalties, but a willful failure to file taxes can escalate into criminal charges. The key difference lies in intent: if the IRS determines that you intentionally avoided filing, the consequences can be severe. So, if you’re behind on your taxes or worried about penalties, it’s important to take action before things get worse. Reach out to us so we may help you navigate your options and get back into compliance—avoiding future criminal charges and minimizing penalties from the IRS.