Could I Go to Jail If I Cannot Pay My Taxes?

Florida has no state income tax. Of course, most Floridians are still on the hook for federal income taxes. This can impose significant financial hardship, particularly for those who are self-employed or rely on non-traditional means for earning a living. In many cases, a person simply cannot afford to pay their income tax bill when it comes due. So could they actually go to jail for non-payment?

Civil vs. Criminal Penalties

The short answer is no, you cannot be sentenced to prison just because you do not have enough money to pay your taxes. The longer answer is that you could face criminal charges related to tax evasion or tax fraud, which differ from simply failing to pay due to a lack of funds. That said, you can face significant civil penalties for not paying your taxes on time.

Civil penalties simply mean that the IRS will assess interest and other additional charges against you on any tax balance owed until it is paid in full. Obviously, this can make it harder for someone who is already behind to catch up. But it is possible to negotiate a payment plan with the IRS. In some cases, the government will even agree to accept less than the full amount owed if the taxpayer acted in good faith.

Where possible criminal penalties come into play, however, is when the IRS suspects tax evasion or tax fraud. Under federal law, a person who “willfully attempts in any manner to evade or defeat any tax” owed is guilty of a felony punishable by up to 5 years in prison and a $100,000 fine. This is what is commonly referred to as tax evasion, and it comes in two basic forms:

• Evasion of Assessment: This is where someone intentionally files a false tax return. For example, if you file your 1040 but deliberately fail to report any part of your income–or claim deductions that you know you are not entitled to–that is criminal tax evasion. This also applies if you lie to an IRS official during a tax audit or any other proceeding designed to determine how much tax you owe.
• Evasion of Payment: Again, if you honestly do not have the money to pay your tax bill, that is not a crime. But if you intentionally conceal assets from the IRS to avoid payment, that is a crime.

In addition to the tax fraud offenses discussed above, willfully failing to file a tax return is also a crime. If you do not file a return each year by the due date–including any extensions–you could be prosecuted and sentenced to a year in prison. So it is always in your best interest to file a tax return even if you do not have the money to pay right now.

Contact Asilia Law Firm Today

Tax evasion and related tax crimes can label you a felon in the eyes of the law. So you must be prepared to defend yourself against such charges. If you need legal advice or representation from an experienced Miami tax fraud lawyer, call the Asilia Law Firm today at 786-420-3014 or contact us online to schedule an initial consultation.