Can You Go To Jail For Not Paying Your IRS Taxes?

Taxpayers routinely ask me if they can go to jail for not paying their federal income taxes.  Admittedly, the bar is not that high for felony tax evasion—the government must only prove three elements:  (i) willfulness; (ii) the existence of a tax deficiency; and (iii) an affirmative act constituting evasion or attempted evasion of tax.[i]  Because the existence of a tax deficiency is generally not a big issue in non-payment cases, the government is left focusing on the remaining two elements:  the taxpayer’s state of mind and evidence of affirmative acts.

Although the bar for federal tax evasion is low, the government does not have the resources nor the will to go after all evasion non-payment cases.  Instead, the government carefully picks and chooses the cases it believes to have the best chances for obtaining criminal convictions.  Predictably, this is where the types and quantities of affirmative acts come into play.  Because the recent Sixth Circuit decision in Pieron[ii] shows this well, that decision is the topic of this article.

Background

Read More

The U.S. tax system is different to every other developed country’s, in that America taxes based on citizenship rather than on residence. That means that whereas most countries only tax residents (and non-residents who have income arising in the country), the U.S. taxes all U.S. citizens wherever in the world they live. Read More

If you employ someone to work for you around your house, it is important to consider the tax implications of this arrangement. While many people disregard the need to pay taxes on household employees, they do so at the risk of paying stiff tax penalties down the road.

As you will see, the rules for hiring household help are quite complex, even for a relatively minor employee, and a mistake can bring on a tax headache that most of us would prefer to avoid.

Commonly referred to as the “nanny tax”, these rules apply to you only if (1) you pay someone for household work and (2) that worker is your employee.

Household work is work that is performed in or around your home by baby-sitters, Read More