What Happens if You File a False Tax Return?

Filing a false tax return leads to serious consequences and it’s something that is commonly caught by the IRS. When filing a fraudulent tax return, fines issued can extend up to $250,000 for individuals and up to $500,000 for a corporation. This can also be accompanied by a 3 year prison sentence if prosecuted as a high dollar tax fraud case.

Tax Fraud

One of two things will happen if you are facing suspicion of tax fraud. If the investigation is dealing with less than $100,000, the IRS will typically issue a letter in the mail and ask for repayment immediately. You can either oblige and pay the balance in full, setup a payment plan with the IRS, or simply ignore it.

Ignoring the letter will lead to the IRS initiating a formal investigation. Prosecution will then follow should the IRS find sufficient grounds to do so.

If the IRS finds tax fraud to be well over $100,000, the IRS will immediately issue a formal investigation and you will most likely be contacted by two IRS agents who will question you. It’s best to hold off on answering all questions and getting an attorney present immediately to finish the questioning with the IRS.

Let your attorney know if you were guilty of the tax fraud so they can work out a plea bargain with the IRS to minimize the prison sentence and associated fees. If you didn’t commit the crime, present all your documentation to your attorney so they can get your investigation situated in the court with relevant information and paperwork.

Be careful when dealing with falsified tax returns because the consequences can lead to a ruined reputation.

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