tax-law
In practice, how bad can this get?
<p>I have had a Google AdSense account for a while. In 2013, Google started requiring to fill out tax information. I was an idiot and decided to claim that I lived in another country and that had no activity in the U.S to avoid having to pay taxes on that income. It was not much money so I assumed it wouldn't be a big deal.</p>

<p>Over the years that income started to become significant and I became concerned. Last week I decided to properly fill out my W-9 and to start reporting that income.</p>

<p>I did the math and I should have had paid a total of $3,200 in taxes from this income between now and 2013 (25% tax bracket every year plus 15.3% self-employment tax).</p>

<p>Yes, I understand that I'm an idiot, that I did a horrible thing, and that I can get in a lot of trouble. I also understand that I should amend my taxes for those years, but let's assume I just let it go.</p>

<p>In how much trouble can I get exactly if the IRS finds out? I understand that there's a 6 year statue of limitation on criminal charges and no limitation at all on fraud. Is this considered fraud? I'm assuming not. Practically speaking, would the IRS go all the way and file criminal charges considering the amount of money I owe? Assuming the statue of limitation clock started ticking last week, how much would I have to pay in penalties and interest if this gets brought up at the very last minute of the 6 year mark? Practically speaking, what's the worst case scenario?</p>

<p><strong>Fraud</strong></p>
<ol>
<li>wrongful or criminal deception intended to result in financial or personal gain</li>
</ol>
<p>So, you knowingly deceived the US government in order to make a financial gain by not paying the right amount of tax. Sounds like fraud to me.</p>
<p>Specific penalties for the IRS are <a href="https://www.irs.gov/uac/Related-Statutes-and-Penalties---General-Fraud" rel="noreferrer">here</a>. Of most relevance is <strong>Title 26 USC § 7201 Attempt to evade or defeat tax</strong>:</p>
<blockquote>
<p>Any person who willfully attempts to evade or defeat any 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:</p>
<ul>
<li><p>Shall be imprisoned not more than 5 years</p>
</li>
<li><p>Or fined not more than $250,000 for individuals ($500,000 for corporations)</p>
</li>
<li><p>Or both, together with the costs of prosecution</p>
</li>
</ul>
</blockquote>
<p>Note that this is per offence. If you have done it for 6 years that is 6 offences so the maximum you face is 30 years and $1,500,000 plus the costs of prosecution.</p>
<blockquote>
<p>In practice, how bad can this get?</p>
</blockquote>
<p>This bad.</p>
<p>You need a lawyer now.</p>
