Penalties and Prosecution
Tax evasion is a felony and punishable in federal court of up to $100,000 and up to five years in prison. Corporations are subject to up to a $500,000 fine, as well as imprisonment for the individuals guilty of tax evasion.
Anyone who is convicted of tax evasion is also subject to paying court costs for prosecution. State tax evasion cases carry similar penalties, but vary slightly from state to state.
Since everyone is required to file taxes each year, multiple years of tax evasion are prosecuted as individual counts. Therefore, a tax scheme that is repeated year after year, counts as a different charge for each one of those years.
Another interesting element of tax evasion prosecution is that proceeds from illegal activity are also subject to federal taxes. Even if the money is acquired through illegal means, an individual is still required to report this illegal income on all income tax returns.
In 1976, the Supreme Court case of Garner v. United States ruled that a declaration of illegal income does not violate a person’s Constitutional right to remain silent.