Many people (including attorneys and lawyers) often mistakenly refer to these as the same crime. They are not. Tax evasion concerns non-payment of taxes. Tax fraud concerns the falsification of one or more documents (usually tax returns) in order to reduce tax liability. The U.S. Tax Code § 7206 is entitled “fraud and false statements.” Although the IRS prefers to prosecute for tax evasion, the IRS believes that this count is “often a viable charge for defendants who commit tax fraud and file tax returns in their own names.” See IRS’s Criminal Tax Manual § 12.00 on Fraud and False Statement. Finally, for each count, the statutory maximum sentence is different. Tax evasion is 5 years. Tax fraud is 3 years.
The statute of limitations is a limit on how far back the IRS can go to criminally prosecute an individual for alleged tax crimes. (Civil prosecution is different.) For most tax fraud counts, the statute of limitations is 3 or 6 years from the last affirmative act of tax fraud. 26 U.S.C. § 6531. However, this period could be longer depending upon the circumstances. For non-filing there is NO civil stature of limitations.
The saddest cases dealing with tax fraud allegations concern the government’s fraudulent misconduct—current or former IRS officials committing fraud. While it is all too common for the Government to accuse the tax payers and citizens of criminal tax fraud (and to succeed in incarcerating them and ruining their lives with bad publicity), it is rare for the Government to be found guilty of fraud.
In court, the IRS gets criminal tax convictions 90% of the time. A small number of practitioners win most of the acquittals. There are criminal tax specialists, practicing three decades or more who have never won a trial with all acquittals in their entire career. This won't be on their website.