You may have a legal obligation to file an income tax return with the IRS every year and to timely pay the associated taxes. Failure to comply with federal tax laws usually results in steep penalties. However, many people don’t realize that you may be subject to criminal prosecution and imprisonment for failure to file a tax return or filing a fraudulent tax return.
Before a determination is made regarding whether an individual will be prosecuted for a criminal violation of the federal tax law, a thorough investigation will be conducted. The IRS Criminal Investigation Division (CI) is charged with the duty to investigate alleged criminal violations of the federal tax laws.
An IRS criminal investigation may result in the recommendation for prosecution by the United States Department of Justice. Not all violations of the federal tax laws will be investigated by the IRS CI, and not all investigations will result in prosecution. In addition to punishing the law-breaker, the prosecutions also serve to encourage others to comply with the federal tax laws. According to the IRS, each year there are approximately 3,000 prosecutions for violations of federal tax laws. However, due to federal budget cuts, this number has been and will likely continue to decrease.
One of the most famous criminal prosecutions of a violation of the federal tax laws was The United States of America v. Alphonse “Scarface” Capone. Although deeply immersed in the criminal underbelly of one of the most notorious crime organizations, it was tax evasion that finally saw Scarface tried, and subsequently imprisoned.
In the 1920s, known to authorities and public alike, Al Capone was either feared or revered as a bootlegger, gangster, and murderer. Despite this widespread knowledge, through 1930, Al Capone spent only a limited amount of time behind bars for relatively minor issues. The federal government decided to pursue tax evasion charges against All Capone in a last ditch effort to finally put the dangerous criminal behind bars for a significant period of time. Through his tax attorney, Al Capone attempted to settle his tax matters with the federal government and avoid prosecution. This attempt was unsuccessful. In 1931, the United States government prosecuted Al Capone for tax evasion. Al Capone was found guilty of three felony counts of tax evasion and two misdemeanor counts of failing to file a tax return. He was then sentenced to eleven years imprisonment and ordered to pay $215,000.00 in back taxes among other costs and fines.
As stated in a previous post, there are many people who attempt to capitalize on the IRS’ intimidating power by impersonating the IRS and threatening immediate arrest or imprisonment in an attempt to fraudulently obtain personal information and/or money from unsuspecting taxpayers. If you are dealing with a tax problem and would like to consult with an experienced tax attorney, call 617.237.6347, visit our contact page at GMDTaxLaw.com or email firstname.lastname@example.org.