Penalties for Lying on Tax Returns

Uncle Sam can prosecute tax cheaters for perjury.

Uncle Sam can prosecute tax cheaters for perjury.

The IRS has some fancy legal jargon for lying on tax returns. You may be committing fraud or perjury according to Uncle Sam if you fib on your return. Penalties for bending the truth with the IRS can lead to some serious trouble. If federal prosecutors decide to throw the book at tax cheaters, they can face jail time and stiff penalties.

False Statements

There is no such thing as a white lie when it comes to the IRS. The IRS considers it fraud if you deliberately misrepresent facts, deceptively alter tax documents or intentionally leave out important information on your tax returns. The IRS is likely to suspect you are playing games if you do things such as fail to report all your income, refuse to cooperate with auditors or have cockeyed explanations for errors on your return.


You may call it a lie, but the IRS calls it perjury. When you sign your tax return you swear under penalties of perjury that it is accurate to the best of your knowledge. Honest mistakes don't equal perjury, but when you knowingly try to mislead the IRS, it can spell double trouble. Fraud and perjury are independent claims, which means the IRS may hang you out to dry more than once for the same monkey business on one return.

Criminal Charges

The IRS can slap you with criminal charges for lying on your tax return. A federal judge can toss a tax cheater in prison for 3three years and hit him with $100,000 in fines for committing perjury. Fudging on returns can also lead to criminal fraud charges. The IRS can seek $10,000 in fines and a year in prison against individuals who file fraudulent tax returns.

Civil Penalties

You also can get hit with civil penalties for pulling the wool over the tax man's eyes. Civil penalties don't include jail time, but they can add up to serious cash. Fines vary based on each situation. For example, a person who files a return chock full of falsehoods can see fines of up to 75 percent of her unpaid tax bill. If a person can persuade the IRS she wasn't acting willfully, fines can cap out at 25 percent.


About the Author

Maggie Lourdes is a full-time attorney in southeast Michigan. She teaches law at Cleary University in Ann Arbor and online for National University in San Diego. Her writing has been featured in "Realtor Magazine," the N.Y. State Bar's "Health Law Journal," "Oakland County Legal News," "Michigan Probate & Estate Planning Journal," "Eye Spy Magazine" and "Surplus Today" magazine.

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