Tax evasion is a serious crime. If the IRS suspects that a person is evading their taxes, they might ask for financial details, including assets, liabilities, and financial transactions. The IRS usually audits to ensure there was an evasion of taxes. If a taxpayer is found guilty, along with penalties, there is possibility of imprisonment.
To help tax evaders get back into compliance, the IRS introduced the Offshore Voluntary Disclosure Program (OVDP). Under this program, taxpayers can avoid paying a heavy penalty and possible imprisonment and get back into compliance with tax laws. Taxpayers that had evaded taxes and want to get back into compliance can use OVDP to reduce their penalty and avoid imprisonment.
Punishment for tax evasion can be imprisonment of up to five-years and/or a penalty of $100,000. Taxpayers need to remember that filing a false tax return, using abusive domestic and/or trust schemes, or having unaccounted money in overseas banks can get them into trouble with the IRS. These are some of the tax crimes that may attract imprisonment or penalties. Taxpayers that may have fallen victim to abusive tax schemes can try to limit the punishment for tax evasion by using OVDP.
Filing correct taxes on time is the best practice. Taxpayers must keep themselves informed about tax frauds to stay protected from tax scams.