The following statistical information is sourced directly from the United State Sentencing Commission USSC. You can view the brief report in its entirety by clicking here. Otherwise, our tax attorneys have excerpted some of the report’s more salient (and surprising) points below. All the following statistics pertain to the 2019 fiscal year, except where otherwise noted.
Who most frequently commits tax crimes, and where?
- A total of 494 individuals were convicted of tax fraud. Tax fraud convictions have decreased since 2015, when 660 individuals were convicted.
- Statistically speaking, the “typical” tax offender is a white (48.3%) male (68.1%) U.S. citizen (93.1%), at an average age of 50 upon sentencing.
- Four out of five tax offenders have no prior criminal history.
- Certain jurisdictions report higher numbers of tax crimes than others, with two of the top five located here in California. Judicial districts with the highest number of tax offenders were:
- Southern District of Florida (23 offenders)
- District of New Jersey (21)
- Southern District of New York (21)
- Eastern District of Pennsylvania (19)
- Eastern District of New York (17)
How is the U.S. economy impacted by these crimes?
- The median loss resulting from the offenses was calculated to be $296,429.
- Astoundingly, more than 85% of the offenses “involved tax losses of $1.5 million or less.” (While “less” is not defined, it is notable that, by comparison, only 21.6% of the offenses caused losses below $100,000.)
What percentage of convicted offenders received enhanced penalties, and why?
- In general, penalty enhancements were more common than penalty reductions. For example, penalties were increased for offenders who:
- Led or supervised the offense (6.3% of offenders).
- Obstructed justice, or otherwise impeded the investigation or case (5.3%).
- Used “sophisticated means” to hide or carry out the offense (11%).
- Used a special skill, or “abused a public position of trust” (4.1%).
- By comparison, only 3.9% of offenders received sentence reductions, which were permitted in cases where the defendant was considered “a minor or minimal participant in the offense.”
How were convicted tax offenders sentenced?
- The majority of those sentenced – a total of 65% – received prison sentences.
- Though alternate sentences were not specified in the report, IRS crime statistics, which are linked below for further reading, note that the term “sentence” may, in place of or addition to incarceration in federal prison, include “confinement to… [a] halfway house, home detention, or some combination thereof.” In other words, convicted offenders may be placed under house arrest or be ordered to live in specific environments, even if they are not necessarily incarcerated in prison.
- The average length of a prison sentence for tax fraud was 16 months, or one year and four months.
If you are interested in additional reading on this subject, one of the best resources is the Internal Revenue Service (IRS). Investigation and enforcement statistics are published annually on the IRS website, such as these IRS criminal investigation statistics for the current fiscal year. You can also use the IRS website’s search function to target specific tax statistics on taxpayer compliance, international tax matters, business tax matters, and related topics.
If you have failed to live up to your legal tax obligations, whether that be filing a timely return annually or providing only factual and true information on filed tax returns, it is in your best interest to resolve the matter before the IRS or state tax authority examines your return or initiates a criminal investigation for intentional violation of the tax laws. An experienced tax defense attorney is a valuable resource in coming into tax compliance. Working with your tax lawyer, you will set out the pertinent facts of your situation and come to an agreement as to the best strategy to get right with the government.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed returns coupled with affirmative evasion of payment) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
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Questions and Answers for Criminal Tax Representation
- When tax defense counsel parallels tax crime investigation
- Guilty of tax obstruction by backdating documents?
- To be found guilty of tax obstruction must a person actually be successful in impeding the IRS’s functions?
- Help! The Document I Gave the IRS Had False Information
- Tax crime aiding or assisting false return IRC §7206(2)
- What is the crime known as tax obstruction § 7212?
- What is the difference between tax perjury and tax evasion?
- What is the tax crime commonly known as tax perjury?
- What is a Klein Conspiracy?
- Increased possibility of civil action in IRS investigation
- Am I Guilty of Tax Evasion if the Law is Vague?
- What happens if the IRS thinks I committed tax crimes?
- What are ways to defend against a tax evasion charge?
- Difference between criminal tax evasion and civil tax fraud
- What accounting method does the IRS use for tax fraud
- Can I Change Accounting Method to the Accrual Method
- What is the willfulness requirement for tax evasion?
- I didn’t know I committed tax fraud. Can I get off?
- Concealed assets from IRS. Can I avoid tax evasion charges
- How government proves I willfully engaged in tax evasion
- What is the venue or court where a tax crime case is heard?
- Must the IRS prove tax crimes beyond a reasonable doubt?
- Is it a crime to make false statements to the IRS?
- Will the IRS overlook my tax evasion if it’s minor?
- Failed to tell IRS about my nominee account
- Audit risk with cash based business transactions
- How to defend a client charged with tax evasion
- Is it tax evasion if I didn’t file income tax return?
- Government says I attempted to evade my taxes. Now what?
- I forgot to pay my taxes or estimated tax. Is this a crime?
- Government proof I “willfully” failed to pay taxes
- 5 Ways to Respond to Tax Evasion Charges
- Being audited after using a tax professional
- Rules for what an IRS agent can do while investigating me
- How tax preparers, attorneys and accountants are punished
- How the IRS selects tax crime lead for investigation
- How does the IRS prosecute suspected tax crimes?
- Does IRS reward informant leads for suspected tax crimes?
- How the government proves deficiency in a tax evasion case
- Do prior tax crimes factor into new IRS tax convictions?
- Requesting conference before investigative report is done
- Requesting conference after IRS Special Agent Report
- What are my rights during an IRS criminal investigation?
- Avoid prosecution for tax crime with voluntary disclosure?
- Defense tactics that make it hard for to prove willfulness
- How a tax attorney can stop your criminal tax case?
- What can you generally tell me about tax crimes?
- Continuing filing requirement with investigation pending
- Federal criminal code crimes that apply to tax issues
- Penalty for making, subscribing, and filing a false return
- CID special agent’s report for criminal prosecution
- What is the discovery process in a criminal tax case?
- What the IRS includes in indictment for tax case
- What is the hardest element of a tax crime to prove?
- IRS methods of gathering evidence to prove tax crime
- What does a grand jury do in IRS tax crime prosecution?
- Failure to keep records or supply information
- Failure to make a return, supply information, or pay tax
- What is attempting to evade payment of taxes?
- What is income tax evasion and how is it punished?
- What is attempted income tax evasion?
- What is the crime of failure to pay tax? What is punishment
- Crime of making or subscribing false return or document
- Criminal Investigation Division investigation tactics
- Tax crimes related to employment tax forms and trust funds
- Tactics to defend or mitigate IRS criminal tax charges
- How the IRS generates leads about suspected tax crimes
- What is the crime ”evasion of assessment” of tax?
- Specific examples of “attempting” to evade tax assessment
- What is the so-called Spies evasion doctrine?
- Does overstating deductions constitute tax evasion?
- Is it tax evasion if my W-4 contains false statements?
- IRC §7201 attempt to evade vs. common-law crime of attempt
- What are the penalties for Spies tax evasion?
- How government proves a taxpayer attempted tax fraud
- What is a tax that was “due and owing.”
- What is evasion of assessment for tax liability?
- Is evasion of assessment different from evasion of payment
- Does the IRS have a dollar threshold for tax fraud?
- What is the IRS burden of proof for tax fraud convictions?
- Are Tax Laws Constitutional?
- What is the source of law that defines tax evasion?
- Does section 7201 create two distinct criminal offenses?
- Does tax evasion definition include partnership LLC
- What if I helped someone else evade taxes?
- Is it illegal to overstate deductions on my tax return?
- Is it illegal to conceal bank accounts from the IRS?
- Do later losses justify prior deductions?
- Common reasons the IRS and DOJ start investigations
- What is the Mens Rea component of tax crimes?
- What is a proffer agreement and what are the risks?
- Why to have an attorney to review a proffer agreement
- Why enter into a proffer agreement?
- Limited use immunity from proffer agreements
- Difference between civil and criminal fraud allegations
