When you earn income by working or investing, you have a legal obligation to pay taxes on the income you receive each year. If the IRS believes that you underreported your income or understated what you owed, it may charge you with tax evasion.
According to H&R Block, most tax evasion cases result from similar circumstances.
How tax evasion charges often arise
You may face charges of tax evasion if you underreport or otherwise misrepresent your income on your tax return. You may also face this charge if you claim improper deductions or take credits without qualifying for them. Another way you may face tax evasion charges is by not filing a tax return at all. However, most tax evasion cases result from people who file their taxes but do so in an improper manner.
When you may have to serve time for tax evasion
The good news is, most people found guilty of tax evasion do not end up serving time in jail or prison. For instance, in 2015 there were about 150 million taxpayers. Of those, only 1,330 were indicted for tax evasion. Thus, your risk of going to prison for tax evasion is low, but it is still a possibility.
While you may not have to serve time in jail or prison following a conviction for tax evasion offense, you still face other consequences. You may have to pay hefty penalties or fines. Depending on circumstances, you may lose or have a lien placed against any property you own.