Non-filing may be a Crime

Very few people are put in jail for not filing a tax return, but it does happen occasionally.  A willful failure to file tax returns is a misdemeanor if you owe taxes.  You can be sentenced for up to a year in jail and a $25,000 fine for each year of non-filing (Internal Revenue Code 7201).  If you failure to file is deemed to be part of a scheme to evade taxes you can be charged with a felony, a more serious crime, which carries a maximum punishment of five years and more sever monetary penalty.  The felony crime requires a deceitful act beyond the non-filing, such as using a fake social security number.  Non-filers may be contacted by the IRS Criminal Investigation Division, or CID.  This does not mean that you will be prosecuted, but you still should get your past due returns prepared and filed.  In deciding whether or not to prosecute a non-filer, the CID considers many factors, such as:

  1.  The number of years you haven’t filed
  2. The amount of taxes due
  3. Your occupation and education
  4. Your previous history of tax delinquencies
  5. Whether or not you are involved in a business that deals with large amounts of cash