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The failure to file a federal or state income tax return is a serious issue with the potential to snowball into a criminal investigation. Depending on factors like whether you acted “willfully” (intentionally) and how many returns you have failed to file, you may need to begin preparing for an IRS investigation or criminal tax fraud charge. In other situations, it may be possible to correct the issue simply by filing the missing returns. It may even be possible to avoid penalties by demonstrating that you had a reasonable cause for not filing, though in order to succeed, such arguments demand compelling evidence and careful presentation. You will need a skilled tax attorney for non-filers to guide you around the dangers and obstacles, enabling you to reenter tax compliance while simultaneously minimizing the risk of criminal tax exposure, audit, and negative financial impacts where possible.
The penalties for tax fraud vary – but all have the potential to be harsh. These penalties can cost the taxpayer not only money but moreover, his or her personal freedom, with some potentially involving years of prison time. Criminal tax offenders may also be placed on supervised release after they leave prison, further restricting their freedoms and privileges. Other consequences of defrauding the IRS may include restitution orders, hefty civil penalties, costly accumulated interest charges, the creation of a criminal record, and/or the loss of professional licenses or certifications, including disbarment, potentially ending one’s career.
What to Do if You Failed to File Taxes
If you have failed to file tax returns, it is only a matter of time before you are audited or criminally investigated by the IRS and other government agencies. Moreover, penalties and interest will simply continue to accumulate while the returns remain unfiled.
Therefore, it is in your best interests to act quickly and proactively by consulting an experienced tax lawyer. Each case requires a unique solution, which our knowledgeable, award-winning unfiled tax attorneys are here to help you find. To set up a reduced-rate consultation concerning unfiled California or federal income tax returns, contact the Tax Law Office of David W. Klasing online, or call today at 805-617-4566.
Is Not Filing Tax Returns a Felony?
The short answer to this question is that it depends on the situation. If you took deliberate, intentional steps to avoid the assessment and payment of income taxes by not filing one or more of your tax returns, you can be charged with a crime because you acted “willfully.” The federal statute that makes non-filing a criminal offense, namely 26 U.S. Code § 7203, explicitly and exclusively focuses on willful failures to file, as opposed to failures that were based on negligence or sheer forgetfulness on the part of the taxpayer.
26 U.S. Code § 7203 states that willful failure to file a tax return is generally a misdemeanor offense. However, felony charges may be filed in situations involving violations of 26 U.S. Code § 6050I – a statute that specifically deals with tax returns “relating to cash received in trade or business.”
What is the Penalty for Failure to File an Income Tax Return?
Through auditing and criminal tax investigations, the IRS attempts to make accurate distinctions between sincere tax errors and calculated attempts at tax fraud. Though the government pursues criminal penalties for only the latter, the former can nonetheless lead to hefty civil penalties. Moreover, civil penalties can be imposed in addition to criminal penalties, doubling the burden for accused tax offenders.
Criminal Penalties for Non-Filers
Criminal penalties for failure to file a tax return are outlined under 26 U.S. Code § 7203. This statute provides a maximum fine of $25,000 (or, for corporations, $100,000), which may be imposed in place of or in addition to a prison sentence of up to one year. In felony cases, the maximum sentence increases to five years.
Civil Penalties for Non-Filers
Failure to file taxes is penalized more severely than failure to pay taxes, making it especially crucial to take swift corrective action. The IRS may impose penalties of up to 5% of the total amount due and owing, to be imposed monthly until the return is filed or the penalty reaches 25%.
San Jose Tax Lawyers and CPAs Providing Non-Filer Assistance Throughout California
At the Tax Law Office of David W. Klasing, our CPAs and attorneys for back taxes have more than 20 years of combined experience representing all types of non-filers, including individuals, corporations, partnerships, and LLCs with state and/or federal tax return issues. We can search for ways to reduce your tax liabilities, limit the penalties or interest charges you may owe, protect your legal rights throughout any tax audit or investigative process, and fight or negotiate to reduce criminal charges if you are accused of acting willfully.
If you need help getting caught up on back California or federal tax filings, we are here to provide assistance. Contact us online right away to set up a reduced rate consultation or call our San Jose tax office at (805) 617-4566 today. Please note that all meetings at our San Jose office must be scheduled in advance. See our policy on scheduling appointments at one of satellite offices here:
FAQs and Tax Information for Non-Filers
To reiterate, the best course of action for any non-filer is to consult with an attorney or attorney-CPA, who can provide personalized guidance based on the facts at hand. However, the following non-filer FAQs may help to provide general information about your issue:
- How Important is it to the Government that I Didn’t File?
- What Are the Common Issues that Non-Filers Face?
- What Can Non-Filers Do to Minimize Risks?
- What Happens After the IRS Identifies Me as a Non-Filer?
- What Should I Do to Re-Enter the Tax System?
You may also wish to browse our tax blog for articles on non-filer tax issues and assistance.
Note: If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship. With end-to-end encryption, strong passwords, and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client. We are generally happy to travel to any of our appointment-only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.
Will it cost me more to hire the Tax Law Offices of David W. Klasing, whose main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment-only Satellite office is close to my location, as opposed to a local company? Absolutely not! See our policies that address this issue here!
