Ted wrote:

- quote -

I see that someone else has provided you with the possible
penalties and the statutes. so I just want to add a few
points.

Civil penalties are a function of the severity of whatever
you have done. This penalties 'may' be removed if you can
demonstrate reasonableness of your error, e.g., written
advice of a tax preparer preferably a CPA, an EA, or a Tax
Attorney.

Criminal penalties are actully hard to come by. You have to
demonstate what are known as badges of fraud.

One of my favorite examples is the person who altered a bank
check used to contribute to his church. Check was actually
written for $25 and it had been altered to read $2,500.
Look at any cancelled check returned to you by your bank and
you will see the amount of the check has been duplicated on
the bottom at the righthand side for optical reader scanning.
I was told that this man got six months in jail. What makes
it funnier is he worked in a bank so he should have known!

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Ted wrote:

- quote -

Penalties:
Criminal - 1-5 years in prison, plus up to $100k and costs of
prosecution (26 USC 7201).
Civil - 75% of the tax, plus interest on both the tax and
civil penalty (26 USC 6653(b)).

The criminal penalty is in addition to any other penalty, so
the prison time is CONSECUTIVE to any other incarceration
sentence arising from the same event(s).

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- quote -

The key issue regarding the citations on the web site:

These were cases investigated, with sufficient evidence that
either conviction occurred, or plea agreement was reached.

As you can imagine, some cases referred for investigation do
not reach this stage. The details are not made public, but
thee might be a STAT in the SOI on investigations initiated.

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"Ted" <Ted[at]ixmil.com> wrote:
- quote -

proving fraud means proving intent, which is hard to do

how many of the 1800 didn't go to prison, did it say?

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Ted wrote:

- quote -

1800 actual, annual pros cases means they considered, to at
least some degree, tens of thousands. Serious "errors" not
referred for prosecution are subject to civil penalties
ranging from 20% to 75%. That has excellent enforcement
effect too.

Presuming staffing were not much an issue, especially Dept.
of Justice, excessive prosecutions would be
counter-productive. They don't want t/p's feeling they need
a criminal defense attorney to discuss a common audit
matter, though it may involve high $$ and/or degree of
negligence. IRS calls it "balanced enforcement."

Fred F.

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"TaxmanHog" <taxmanhog[at]comcast.net> wrote:
- quote -

Thanks, that was just what I was looking for. They only
investigated 1800 individuals for fraud! That sorta implies
that all but the most extreme are taken as errors.

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"Ted" <Ted[at]ixmil.com> wrote:

- quote -

supposedly they are common enough that the irs runs stories
like that around this time of year most every year to
encourage voluntary compliance with tax laws he wasn't
avoiding tax (legal), he was evading tax (illegal) seems
imprisonment might be one of the "penalties" involved for
the criminal tax evasion

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"Ted" <Ted[at]ixmil.com> wrote:

- quote -

Check out the following pages of IRS.GOV, you might get a
feel for what is being pursued.

http://www.irs.gov/compliance/enforc...121259,00.html
http://www.irs.gov/compliance/enforc...146259,00.html

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"Ted" <Ted[at]ixmil.com> wrote:

- quote -

News of this kind of thing is very common this time of year.
The IRS wants to scare everyone into paying their taxes.

Stu

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Ted wrote:

- quote -

As worded, neither IRS nor Dept of Justice disposes of
matters like that. Horrid tax policy.

It's possible a plea deal did not contain a restitution
agreement, such as where the defendant had no more money
left (e.g., paid out to attorneys), but IRS will still set
up the tax and penalties and attempt to collect. So, maybe
it's what the defendant erroneously thought the deal was,
and told media.

Fred F.

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I read in today's newpaper that a man plead guilty to filing
false tax returns to avoid paying $40,000 in taxes. How
common are such prosecutions? What sort of penalty would be
involved?

No, I haven't done anything wrong (I certainly wouldn't have
posted here if I had!); the paper doesn't say, and I am just
curious.

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