What Percentage of Federal Tax Offenders Were Sentenced to Prison in 2019?

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:
  1. Southern District of Florida (23 offenders)
  2. District of New Jersey (21)
  3. Southern District of New York (21)
  4. Eastern District of Pennsylvania (19)
  5. 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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Regardless of your particular business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.

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