Tax Evasion Penalties and Other Consequences

Disclaimer: The following information only works to provide general guidance and general understanding as to the legal nature of tax evasion and its corresponding penalties. It is not, however, equivalent to specific legal advice regarding the topic. Always speak to a licensed attorney if you seek actual legal information about the topic.


Did you know that unpaid taxes is a severe problem? By now, you should know that avoidance to pay taxes by using illegal means is a form of tax evasion. Tax evasion is a criminal offense you have to watch out for. If you don’t want to encounter tax problems in the future, take note of the information below about tax evasion and its penalties. 

How Does Tax Evasion Happen?

  • Paying of taxes is an obligation you are responsible for as a citizen of the state. While this is true, you can also take legal steps to minimize your tax liabilities.
  • However, the moment you choose to avoid the payment of taxes intentionally, you may have to face charges of tax evasion. To better understand the concept of tax evasion, below are the circumstances where tax evasion happens:
    • You claim improper tax deductions.
    • You don’t report your income in full.
    • You fail to file tax returns despite the fact that you have a taxable income.
    • You falsely claim a charitable deduction.
    • You hide money in overseas bank accounts.
    • You misrepresent the facts stated on your tax return.
    • You omit a property to avoid the payment of required taxes.
    • You purposely over-report your deductions or expenses.
    • You take illegal deductions for personal expenses.
    • You understate an estate’s value and overstate the property value donated to charitable institutions.
  • Remember that facing a tax evasion case is a frustrating situation. Aside from the long list of potential penalties you’re going to encounter, the mental stress and anxiety are waiting for you around the corner.

What Are The Tax Evasion Penalties and Other Consequences?

When you deliberately escape the payment of your taxes, be ready for a possible tax evasion case and its underlying penalties that you have to go through along the way. Below are some tax evasion penalties and consequences you have to keep in mind before doing anything illegal:

  1. Criminal Charges: As mentioned earlier, tax evasion is considered as a felony criminal offense.
  • Take note that tax evasion charges can remarkably affect the way you live your life. They may even impact the exercise of your legal rights in your state.
  • Remember that facing criminal charges for tax evasion is tiresome as you have to go through a long and complicated litigation process.
  • Bear in mind that being convicted of tax evasion means a criminal record for the rest of your life.
  1. Payment of Penalties: When you’re caught by Internal Revenue Service for tax evasion, you can be fined with penalties.
  • In short, the penalty for a tax evasion case may cause you to shell out thousands of dollars or more.
  • That’s why it’s important that you file your tax return on time to minimize your risk of paying excessive penalties.
  • You have to understand that your failure to file a tax return entails a higher penalty than your inability to pay the penalty.
  1. Payment of Interests: Bear in mind that payment of tax obligations usually follow a particular schedule.
  • If you don’t pay on time, the Internal Revenue Service is mandated by law to impose interest.
  • However, rates of interest and other penalty charges vary from time to time. That’s why you have to be frequently updated with the changes so that you know what to do when dealing with tax liabilities.
  1. Prison Time: One of the most massive consequences of tax evasion is going to prison. If you are held liable for tax evasion, the court will order your jail sentence for up to five years.
  1. Tax Liens on Property: When you’re guilty of tax evasion, one of the things you can expect is the automatic imposition of a federal tax lien.
  • Take note that a federal tax lien is a type of lien which automatically arises in your property the moment you fail to fully pay your required taxes from the time the Internal Revenue Service creates a tax assessment.
  • Due to this situation, your property will be under a tax lien until all your tax obligations including the interest, penalty and other fees are paid in full.
  1. Loss of Property Rights: Losing your property rights, in the long run, can be a devastating consequence of a tax evasion offense.
  • When you’re charged and convicted of tax evasion, you cannot exercise your property rights over your income, bank accounts, retirement accounts and house and lot.
  • While these properties are seized, you can do nothing except to wait until all of them are sold to satisfy your tax obligation.

Keep in mind that tax evasion charges require you to face the possible penalties and other consequences. For that reason, it’s vital that you get to know your rights about tax collection processes. If you want to understand how tax legal matters work, consult an attorney for actual legal advice as soon as possible.

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