Tax Fraud: Top 3 Ways You'll Go Straight to Jail!

Can you go to jail if you don't pay your taxes? The short answer is "Yes", not filing your taxes and committing tax fraud are Federal Offenses. You may have dodged the IRS for now, but eventually, you will get caught.

The Top Three Tax Crimes That Mean Jail Time

Tax Crime #1, Under-reporting: You have to list ALL income you receive each tax year. Not reporting all of your income sources or reporting your income as less than you earned is known as under-reporting, and it's a serious crime.

Tax Crime #2, False Claims: A common example are people claim a spouse or children that they don't have. I encountered this so often that people must be convinced it's legal. But trust me, it's not!

Tax Crime #3, Never Filing Tax Returns: What riles up the IRS the most are people who simply never file tax returns. They consider these people tax protestors, and will take very aggressive steps toward penalizing these people.

The IRS "Badges of Fraud" Get Caught & It's Straight to Jail

IRS Agents and Auditors search for these "Badges of Fraud" when they analyze suspicious tax cases.

Badge of Fraud #1: No income sources

Badge of Fraud #2: Overstated Deductions

Badge of Fraud #3: Personal expenses as business expenses

Badge of Fraud #4: Sudden transfer of ALL funds and property

Badge of Fraud #5: Property transferred to close friends or family

Badge of Fraud #6: Keeping two sets of books, or no books

Go Straight to Jail: Jail time for Tax Fraud is not the most common punishment used by the IRS, but it is still a possibility. Tax Evasion carries the punishment of five years. Filing false statements can land you in jail for three years. In both cases, you can also be fined up to $250,000 (plus court costs)! Fraud doesn't pay!