Many people feel that taxes are too high, but most don't go so far as to not pay when the tax bill comes around. What happens if you don't pay your taxes in Indiana? Tax fraud or tax evasion is when someone intentionally doesn't pay or underpays his or her taxes. This can happen by purposefully completing forms inaccurately in order to owe less to the state.
Tax fraud or evasion is illegal in Indiana and you could be subject to both criminal and administrative penalties, depending on the fraud perpetrated and your intent. If you or a loved one are facing a tax related charge, you should contact a qualified local criminal defense attorney who specializes in tax fraud cases for assistance.
Tax Fraud and Tax Evasion Penalties
Tax fraud and tax evasion are white collar crimes. Tax evaders typically owe 100% of the correctly calculated unpaid taxes as well as the cost to the state of Indiana for the extra effort to collect the taxes. The taxpayer, whether an individual, partnership, or corporation, can be found have evaded their taxes and both can be penalized accordingly.
Penalties can be even more severe for tax professionals, such as CPAs, who perpetrate tax fraud. For example, when CPAs fail to file or fraudulent file their own income tax returns, they can be sanctioned, possibly losing their license to practice and thus their employment.
Indiana Tax Fraud and Tax Evasion Laws: Statutes
Details on Indiana tax fraud and tax evasion laws are outline below:
Indiana Code Title 6: Taxation contains the tax laws for income, property, sales, cigarette, and use taxes, as well as the penalties for fraud and evasion of these taxes.
Consumers may be most interested in the income tax fraud sections at: 6-3-6-11: Evasion of Tax and 6-3-6-10: Taxpayer's Record Keeping Requirements & False Entries
It's illegal for a taxpayer to fail to file a state income tax return (when required), make a false return with intent to defraud state, evade paying the tax, not allow the Indiana Department of Revenue to examine your records, or refuse to produce testimony or records as required by law. Any of these things are a Level 6 felony. Both the attorney general and prosecuting attorney can enforce this law.
Taxpayers must keep and preserve their records (as required) so they can be examined by the Department of Revenue, as needed. Failure to do so is a Class A misdemeanor. However, if a taxpayer makes false record entries AKA "cooks the books" with the intent to defraud the state or avoid paying taxes, it's a Level 6 felony.
Similar tax evasion laws exist for other, non-income, taxes in Indiana, including utility receipt, cigarette, and petroleum severance taxes.
Statute of Limitations
Generally, crimes must be prosecuted within a specific period of time, called the statute of limitations. Typically, Indiana has a three-year statute of limitations for tax liabilities. However, when a return is not filed, is blank or unsigned, or is fraudulent, the three-year clock doesn't start running. This permits even old tax fraud to be pursued. Fraudulent returns require:
- Misrepresentation of a fact
- Guilty knowledge by taxpayer of the falsity of the fact
- Deceiving the Department of Revenue (DOR)
- The DOR relies on the fraud
- The DOR is injured, usually shown by not being able to collect the tax owed
Penalty Jail and Fine Schedule
Punishments for felonies and misdemeanors in Indiana vary by level or class. The penalty ranges for the tax fraud and tax evasion crimes listed above are:
Additionally, a fee to recover the expenses incurred by the state of Indiana for investigating and prosecuting the tax fraud or evasion can be levied on the evading taxpayer.
Note: Indiana criminal law transitioned from classifying felonies as Classes A-D to Levels 1-6 on July 1, 2014. Some individuals, legal self-help literature, or websites may still refer to the old system.
Note: State laws are constantly changing -- it's important to verify the state law(s) you are researching.
Research the Law
Indiana Tax Fraud and Tax Evasion Laws: Related Resources
Charged With Tax Fraud? You Will Probably Need an Attorney
Taxes can be quite confusing and it's quite common to make errors on your tax returns without intending to defraud the government. If you are facing charges of tax evasion or tax fraud, you'll want to put together the best defense possible. Get started today and contact an Indiana criminal defense attorney.