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Differences Between Criminal Tax Evasion and Civil Tax Fraud [Infographic]

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    There are two main types of federal tax fraud punishment you could face. These include civil tax fraud, usually punished only with fines, or you can be investigated for criminal tax evasion or other tax crimes, which can be punished with imprisonment and restitution.

    What Is Civil Tax Fraud?

    For there to be civil tax fraud, the government must show that you intended to fraudulently escape your tax obligations. For many criminal offenses, ignorance of the law is not an excuse or defense. However, this is certainly not true in tax law—willful intent is legally distinguished from mere negligence, inadvertence, and reliance on incorrect technical tax advice.

    The government must only present clear and convincing evidence that civil tax fraud occurred.

    What Is Criminal Tax Evasion?

    Any willful attempt to get out of your tax obligations that could result in a civil fraud penalty will also constitute criminal tax evasion. There is a wide range of activities that constitute tax evasion. For example, you may face criminal penalties for making false statements to the IRS, concealing assets from the IRS, or failing to file your tax returns.

    For a criminal tax evasion conviction, the prosecution must prove guilt beyond a reasonable doubt. This is a very strict standard.

    When People Face Both Accusations

    Taxpayers can be held accountable for both civil tax fraud and criminal tax evasion with respect to the same conduct. In other words, it is up to the government to decide which types of tax offenses defendants will be charged with and how that behavior will be punished, civilly or criminally.

    While civil tax fraud usually only results in monetary fines, those convicted of tax evasion can face various forms of punitive action, including imprisonment & restitution for the financial harm caused the federal and state governments.

    Criminal Tax Violation Examples

    • Failure to File Tax Returns
    • Underreporting Income
    • Failure to Disclose Foreign Assets
    • Unreported Digital Asset Income
    • Employment Tax Fraud

    Avoiding Civil Tax Fraud and Criminal Tax Evasion

    With the help of the right tax professional, you can easily employ tax filing practices that will insure you avoid criminal tax evasion charges and civil tax fraud penalties.

    You should always present true accurate and complete information to your preparer and avoid any tax planning strategy that appears “too good to be true.” Furthermore, you should review every line of your tax return before filing it and you should speak up immediately if you suspect any problems with your tax returns.


    If you risk being accused of or have been accused of tax crimes and face civil fraud penalties, get help from our Dual Licensed Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing by calling (800) 681-1295. 

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