These days, filing your taxes can prove endlessly confusing, and it can become increasingly complicated when new tax laws take effect and change the existing filing rules and guidelines even further. Because there is so much room for error when filing your taxes, it can be all too easy to make mistakes or omissions, but even if you do not overtly intend to lie on your taxes, doing so can still land you in serious trouble.
Just what types of penalties and repercussions can you face these days for lying on your taxes?
A heightened audit risk
While your overall risk of having the Internal Revenue Service audit you is low, there are certain things you can do to get your name moved to the top of the pile. Lying or omitting information on your taxes is one of them. The IRS receives notification about all the income you have received throughout the year, so not being truthful when it comes to your income will almost undoubtedly come back to bite you.
Hefty fees and penalties
Lying on your taxes, can, at best, leave you facing substantial fees and penalties, and at worst, you could wind up facing considerable legal trouble. If your lies or omissions make it so you do not pay your entire tax obligation by the due date, you can anticipate facing late fees or underpayment penalties. Falsifying information on your taxes can potentially lead to late fees as high as $250,000.
About 300 Americans receive convictions for tax fraud every year, and those who do often face serious criminal consequences. Depending on the circumstances surrounding your tax crimes, you could potentially face as many as 10 years behind bars. Tax fraud convictions can lead to periods of imprisonment that last up to five years, while concealing assets in foreign bank accounts can lead to imprisonment terms of up to 10 years.
In summary, even if you do not intentionally lie on your taxes, failing to enter all information, or accidentally entering the wrong information, can lead to considerable penalties and hardships.