Very few Americans are audited by the Internal Revenue Service each year. Recent reports reveal that less than 1% experience IRS audits. As a result, not many people have to wonder, “What happens if you are audited and found guilty?”
However, if you do face an IRS audit, you risk being found guilty of not paying your fair share of taxes. This could cause many legal complications, including potential IRS penalties like fines and imprisonment.
So, what happens if you are audited and found guilty? Continue reading to learn more, and take advantage of the audit defense services available through Levy & Associates.
If the IRS performs an audit and discovers you should have paid more than you did when filing taxes, you reserve the right to file an appeal in many instances. The IRS will inform you of this right if you’re eligible to appeal the agency’s audit findings.
Use this to your benefit by going through the appeals process. Your appeal might be successful if:
Filing an appeal could solve your audit worries. Consider working closely with a tax consultant throughout the IRS appeals process.
If your appeal of an IRS audit is eventually denied — or if you aren’t eligible for an appeal for some reason — you will likely face IRS penalties. They’re typically financial penalties that force you to pay the taxes you owe the IRS, plus interest accrual. And it may not end there.
If you’re wondering, “What happens if you are audited and found guilty of tax avoidance or tax evasion?” this will be a different story. In this case, you might face an even stiffer civil fraud penalty.
This penalty is often worth 75% of your tax underpayment amount in addition to the taxes you already owe. This could put you into a precarious financial position by making your tax obligations nearly double what they would have been otherwise.
The majority of those who face IRS audits don’t end up facing jail time, but some do. However, if the IRS suspects you of serious tax-related crimes, such as tax evasion or tax fraud, you might not like the answer to the question, “What happens if you are audited and found guilty?” You could land behind bars.
Tax fraud, for example, carries a maximum jail sentence of three years. Tax evasion carries a maximum jail sentence of five years.
The IRS employs agents who maintain the statutory authority to place those who commit criminal tax fraud or evasion under arrest. They could arrest and imprison you if a criminal investigation shows you knowingly failed to pay taxes or paid significantly less than what you should have to the IRS.
There isn’t a cut-and-dry answer to the question, “What happens if you are audited and found guilty?” Some people can appeal the outcome of an audit and sidestep IRS penalties. Others could face hefty fines and even jail time for tax-related crimes.
Levy & Associates is here to help those facing audits. We can also offer accounting services that may help you avoid an audit in the first place.Contact us at 313-447-1704 or fill out this convenient form to arrange to speak with an experienced tax consultant about any tax troubles you might be having.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.