Iowa Tax Fraud and Tax Evasion Laws

There are both state and federal laws that criminalize tax fraud and tax evasion. These laws impose stiff fines and even prison sentences on those who willfully attempt to evade paying their taxes. While the terms "tax fraud" and "tax evasion" are often used interchangeably, tax fraud occurs when someone intentionally makes false statements on their tax return while tax evasion encompasses any attempt to avoid paying a tax.

Common examples of tax evasion include:

  • Intentionally failing to file a tax return
  • Willfully failing to pay a tax
  • Intentionally failing to report all income received
  • Willfully making false or fraudulent claims regarding taxes
  • Intentionally preparing or filing a false tax return

Iowa's Tax Fraud and Tax Evasion Laws

The table below outlines Iowa's main tax fraud and tax evasion laws.

Code Section

Iowa Code section 421.27: Willful Failure to File or Deposit

What's Prohibited?

  • Willfully failing to file a tax return or deposit form with the intent to evade a tax, or
  • Willfully filing a false tax return or deposit with the intent to evade a tax

Penalties

A penalty of 75% shall be added to the amount owed.

Tax Fraud and Identity Theft

Taxpayers become identity theft victims when their identity is used to file a fraudulent income tax return. The Iowa Department of Revenue suggests that victims of identity theft tax fraud follow the steps listed below:

  • Contact the IRS Identity Protection Specialized Unit at (800) 908-4490
  • Contact the Iowa Department of Revenue
  • Place a fraud alert on your credit reports
  • File a complaint with the Federal Trade Commission by calling (877) ID-THEFT
  • File a report with your local police department, and
  • Contact the Iowa Attorney General's Office at (800) 373-5044

Federal Tax Evasion

Under federal law, willfully attempting to evade or defeat a federal tax constitutes a felony. Federal tax evasion is punishable by a fine of up to $100,000 ($500,000 in the case of a corporation), and/or imprisonment for up to five years. See 26 U.S. Code section 7201.

Additional Resources

State laws change frequently. For case specific information regarding Iowa's tax fraud and tax evasion laws contact a local tax lawyer.

Next Steps: Search for a Local Attorney

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