Contrary to public opinion, fostered not only by a poorly educated press, but also by the IRS, and random incompetent attorneys or lawyers, it is an error to call all tax crimes criminal “tax evasion.” There are a litany of separate statutes dealing with taxes.
In plain English, tax evasion is using illegal means to avoid paying taxes. If you are convicted of tax evasion, you are labeled as a felon. It is punishable for up to five years in prison for each fiscal year of tax evasion. Other crimes may have longer sentences.
The U.S. Tax Code states: “Any person who willfully attempts in any manner to evade or defeat a tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.” 26 U.S.C. § 7201. The statute of limitations for tax evasion is six years from the last affirmative act of evasion. 26 U.S.C. § 6531(2).
As opposed to criminal tax evasion, failure to file tax returns is a misdemeanor. 26 U.S.C. § 7203. In plain English, it means that you didn’t file a tax return even when you were required by law to do so. If you are convicted of failure to file, you do not lose the same rights as a felony conviction. Failure to file is punishable by one year in jail. Of course three counts (separate years) can add up to three years. Failure to file is much better than tax evasion… but nowhere near as good as “not guilty” on all counts!