4

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.

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.

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).

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.

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?

closed as off-topic by Dale M, Pat W., jimsug Apr 26 '16 at 8:57

This question appears to be off-topic. The users who voted to close gave this specific reason:

If this question can be reworded to fit the rules in the help center, please edit the question.

  • 1
    Why wouldn't it be fraud? – phoog Apr 25 '16 at 22:16
  • @phoog I don't know. What's the difference between fraud and crime in this context? – MarcB Apr 25 '16 at 22:19
  • 2
    I'm no expert but my understanding is that if you lie about your income on your tax return, that's fraudulent. Your best bet is to talk to a tax lawyer, though that will probably be somewhat costly. – phoog Apr 25 '16 at 22:29
  • 12
    It's serious enough that you should not ask here, and you should talk to an attorney to see how best to extricate yourself. – user6726 Apr 25 '16 at 22:34
  • 2
    What country did you pretend to be from? It might be time to move there for real. Maybe get a fake mustache and sunglasses, too. – Patrick87 Apr 26 '16 at 2:31
7

Fraud

  1. wrongful or criminal deception intended to result in financial or personal gain

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.

Specific penalties for the IRS are here. Of most relevance is Title 26 USC § 7201 Attempt to evade or defeat tax:

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:

  • Shall be imprisoned not more than 5 years

  • Or fined not more than $250,000 for individuals ($500,000 for corporations)

  • Or both, together with the costs of prosecution

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.

In practice, how bad can this get?

This bad.

You need a lawyer now.

  • 1
    It was for 3 years, not 6. Also, I meant how bad in practice, not in theory. There's no way that someone could go to jail for 30 years and owe $1.5 Million dollars in fines for skipping $3,200 in taxes. I'm not El Chapo. Whatever happened to "the punishment should fit the crime"? – MarcB Apr 26 '16 at 1:37
  • 7
    I think you are seriously underestimating how the IRS will view this. This is not a case of a mistake or an oversight: it is a deliberate plan by you to defraud the US government. The amount is largely irrelevant. – Dale M Apr 26 '16 at 2:02
  • 3
    @MarcB Or, since it's such a slam-dunk case, a hot-shot up-and-coming federal prosecutor decides to make a highly publicized example of you. Armed robbery is armed robbery whether you get $10 or $10,000,000. This is a felony we're talking about here - get some legal help. – Patrick87 Apr 26 '16 at 2:36
  • 3
    @MarcB This is why you need a lawyer. Now. No advice from some internet comments is going to give you an accurate description of your situation; only a lawyer who was thoroughly reviewed your situation will – David Grinberg Apr 26 '16 at 3:09
  • 2
    @AndrewGrimm No, there are people in jail in the US with sentences of several hundred years. – Dale M Apr 26 '16 at 4:36

Not the answer you're looking for? Browse other questions tagged or ask your own question.