Significant Distinctions between Criminal Tax Fraud and Civil Tax Fraud

tax fraudIndividuals may be charged with either a criminal or civil offense if they are suspected of tax fraud. The nature of the charge against them will determine the potential consequences they face and the possible defenses that an experienced tax attorney can assert on their behalf. If you are facing a civil tax audit or a criminal tax audit, it is important that you understand the significant distinctions between them.

Penalties for Criminal Tax Fraud and Civil Tax Fraud

IRC § 7201 defines criminal tax fraud while IRC § 6663 deals with civil tax fraud. Civil tax fraud penalties are limited to monetary consequences and do not result in a criminal prosecution. Common civil infractions and their associated penalties include:

  • Fraudulent failure to file a tax return – 15% of the net tax due for each month up to five months with a maximum penalty of 75% of the unpaid tax
  • Filing a fraudulent tax return – 75% of the underpayment amount


Criminal tax fraud can result in a significant period of imprisonment, among other penalties. For criminal tax fraud, the potential penalty is directly tied to the specific criminal charge you face. For example, some common crimes and punishments related to criminal tax fraud include:

  • Tax evasion – This crime carries a maximum sentence of five years imprisonment and a fine up to $100,000 for individuals or $500,000 for corporations.
  • Willful failure to pay tax, failure to file or failure to keep sufficient records – This crime carries a maximum term of imprisonment of one year, accompanied with a potential fine up to $25,000 for individuals or $100,000 for corporations.

Potential Defenses

The potential defenses against the criminal or civil charges are also different. For example, in a criminal proceeding, the focus may be on your intent to commit a tax crime. If you are found not guilty at the criminal level, the doctrine of collateral estoppel may be applied so that the same issues are not the subject matter of additional tax litigation.


Legal Assistance for Your Criminal or Civil Tax Charge

Whether you are facing criminal or civil charges for tax fraud, experienced attorneys at Robert J. Fedor Esq., LLC can help. We can help build a legal strategy that is customized to provide you with an effective criminal tax defense in Chicago or to minimize your civil penalties. Contact our Chicago tax attorney to get started today.


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