Ask the Tax Resolution Expert – Are Penalties Severe for Underreporting Income?
QUESTION: Some of my income is paid to me in cash. If I do not report all of it, will the penalty be a fine?
Answer: Whether you underreport some, most, or all of your income, the penalties are severe! Do not think that the IRS will fine you and that is it! The IRS will consider you a tax cheat and you will be guilty of tax evasion, even for a the smallest amount of underreported income.
In a severe case, like the one below, the man faces up to five years in prison and a fine of up to $100,000!
John Patrick Armstrong, 45, of Raleigh, N.C., was indicted for tax evasion relating to individual returns for the years 2002 to 2004.
The government alleges Armstrong underreported his income from 2002 to 2004 by $1.5 million. In addition to the tax evasion charges, Armstrong is cited with failing to disclose his interest in or authority over financial accounts in a foreign country for the years 2002 to 2004.
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Tags: attempted tax evasion, tax cheat, tax evasion, underreporting income
May 12th, 2009 at 1:00 pm
[...] Penalties are severe for evading taxes or underreporting income!
September 11th, 2009 at 10:38 am
John P. Armstrong is my ex-husband. I was surprised to find he was aquited of all charges since I am convinced he’s guilty. Do you have anyupdated information about the case/ Thankyou.
October 12th, 2009 at 2:32 pm
Hi Mary, thank you for your post. We take a keen interest in keeping up with all the latest interesting tax news out there–once we hear an update about your ex-husband’s case, we will update and let you know!