The Tax Series: Civil Penalties

If You Commit Tax Fraud, You Pay

With thousands of pages in the tax code, one thing about taxes makes perfect sense: many people are fined for inaccuracy, delinquency, or failure to pay; but those fines are relatively small.

Meanwhile, the highest penalties are levied against outright fraud. If you're viewing individual taxes below you'll see that individual income tax filers caught for fraud paid on average more than $53,000 each in 2007.

Ellie Fields

If You Commit Tax Fraud, You Pay

With thousands of pages in the tax code, one thing about taxes makes perfect sense: many people are fined for inaccuracy, delinquency, or failure to pay; but those fines are relatively small.

Meanwhile, the highest penalties are levied against outright fraud. If you're viewing individual taxes below you'll see that individual income tax filers caught for fraud paid on average more than $53,000 each in 2007.

Changing the tax type to corporate tells a similar story, only this time the defrauders pay over $1 million in fines each. But when you look at estate and gift taxes, you see that the biggest problem is accuracy. The average penalty exceeded $100,000 in 2007 for people with inaccurate returns in estate and gift taxes.

Source data: IRS Table 17. Civil Penalties Assessed and Abated, by Type of Tax and Type of Penalty, Fiscal Year 2007. Data includes only civil penalties assessed, not abated.