What Are the Penalties for Tax Fraud?


The IRS can assess several different types of penalties for tax fraud, including the following:

  • Civil tax fraud penalty
  • Fraudulent failure to file penalty
  • Criminal penalty for filing a fraudulent return
  • Criminal tax evasion
  • Willful failure to pay estimated taxes
  • Trust fund recovery penalty
  • Penalty for willful failure to file Foreign Bank Account Reports (FBARs)

Civil penalties are more common than criminal penalties. However, both types of penalties may be assessed in some cases. If the IRS is auditing your return and you are concerned about potential tax fraud, contact a tax attorney before you say anything to the IRS.

Civil Tax Fraud Penalties

The civil tax fraud penalty is up to 75% of the tax due. In addition, you’ll owe the back taxes, other penalties like the failure-to-file or failure-to-pay penalties, and interest.

Criminal Tax Evasion

Criminal tax evasion can result in jail time. The maximum penalty is typically 5 years in jail and up to $100,000 in fines.

A taxpayer can be charged with both criminal and civil tax fraud, along with other charges. However, different legal standards are used for civil and criminal cases.

Fraudulent Failure to File

This penalty is harsher than the general failure-to-file penalty. A fraudulent failure-to-file results in a penalty of 15% of the unpaid tax each month, while the regular penalty is only 5% each month.

The IRS assesses the regular failure-to-file penalty most of the time. The advanced penalty is generally reserved for taxpayers with a history of noncompliance, pattern of non-cooperation, or clear intent to violate the tax laws.

Special Tax Fraud Penalties

The Trust Fund Recovery Penalty (TFRP) is equal to 100% of the unpaid trust fund taxes. Like other tax fraud charge, the TFRP requires a willful failure to collect or submit trust fund taxes to the IRS.

Willful FBAR penalties can be up to $100,000 or 50% of the highest foreign account balance. Non-willful FBAR penalties are much less severe, but can still reach $10,000 per violation.

Contact an Attorney

The IRS has the burden to show that you willfully or intentionally committed tax fraud. Contact a tax fraud defense attorney to make sure you present the strongest possible defense to these charges.

Get free tax advice from a Michigan tax fraud defense lawyer by calling Ayar Law at 248-262-3400 today.



Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.