by Brian Mahany
The numbers are out and they aren’t good for people convicted of tax crimes. While the U.S. Department of Justice Tax Division has always enjoyed a very high conviction rate, many people convicted of tax crimes never went to jail. Not anymore.
According to the latest statistics, jail sentences have increased by 40% over the last decade. In 2001, the average tax offender received a sentence of 18 months. Now those sentences average 25 months.
The statistics are a bit misleading because a decade ago, half the people convicted never went to jail. The average sentence may have been 18 months but many folks got house arrest while others received sentences of several years. Now, those convicted are probably going to jail. In other words, not only has the average sentence increased but so has the likelihood of receiving a prison sentence.
Sentences in federal criminal cases are governed by the United States Sentencing Guidelines. Although no longer binding on judges, they are the court’s starting point and most judges stay within guidelines.
The sentencing guidelines attempt to account for a wide range of factors including one’s criminal history, whether the defendant used “sophisticated means” to carry out the crime and whether the defendant took early acceptance of responsibility for his or her actions. For tax cases, the guidelines also look at “relevant conduct” tax loss. The higher the tax loss, the longer the recommended sentence.
The current guidelines impose suggest stiff penalties for tax crimes and many judges now believe that house arrest is not a strong enough deterrent to insure voluntary compliance.
What does this mean for people with tax problems? Plenty.
First, if you know you have a problem, don’t bury your hand in the sand. The IRS operates on a “first contact” basis. That means if you come clean before you are caught, criminal penalties can generally be avoided.
Second, if you are indicted and convicted, it pays to have a lawyer with extensive federal criminal tax appearance. Adjustments to the sentencing guideline calculations often can mean the difference between prison and freedom. Although there are many good lawyers that can negotiate a fair plea agreement, the final sentence is up to the court. Mastery of the federal sentencing guidelines and the thousands of court cases interpreting those guidelines separates great criminal tax lawyers from the rest of the pack.
If you have unreported or unpaid federal taxes, have other criminal exposure or are already under criminal investigation, give us a call. Our criminal tax lawyers are well experienced with tax evasion, false returns, unreported foreign accounts, criminal FBAR violations and money laundering cases. For more information, contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at All inquiries are covered by the attorney client privilege and are kept in strict confidence.
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine and Minneapolis, Minnesota. IRS services available worldwide.