Rhode Island Tax Fraud and Tax Evasion Laws

Both the federal and state governments have laws that criminalize tax evasion and fraud. These laws are broken any time an individual, or an entity, intentionally attempts to evade a tax. While the terms "tax fraud" and "tax evasion" are often used interchangeably, tax fraud is technically a type of tax evasion that occurs when a taxpayer willfully submits a fraudulent tax return in order to evade a tax. Some 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, and
  • Intentionally preparing or filing a false tax return

The table below briefly outlines the civil penalties that are imposed on offenders who commit tax evasion in Rhode Island.

Code Section

Rhode Island Code section 44-30-85: Additions to Tax and Civil Penalties

Fraud

 

If any part of a tax deficiency is due to fraud, 50% of that part of the deficiency shall be added to the tax.

Failure to Collect and Pay Over Tax

 

Any person who is required to collect, truthfully account for, and pay over the Rhode Island personal income tax who willfully fails to do so, or willfully attempts in any manner to evade or defeat the tax, is fined a civil penalty equal to the total amount of the tax evaded.

Negligence

 

If any part of a deficiency is due to negligence or to intentionally disregarding the Rhode Island personal income tax law (but without the intent to defraud), 5% of the deficiency will be added to the tax.

Federal Tax Evasion Law

Under federal law it is also illegal to attempt to evade or defeat a tax. Any person who willfully attempts in any manner to evade or defeat any federal tax is guilty of a felony and will be punished by a fined of up to $100,000 ($500,000 in the case of a corporation), and/or imprisonment for up to five years.

Reporting Tax Evasion or Fraud

If you know or suspect that tax evasion or fraud is being committed in Rhode Island, contact the Rhode Island Department of Taxation at (401) 574-8941.

Additional Resources

State laws change frequently. For case specific information regarding Rhode Island's tax fraud and tax evasion laws contact a local tax attorney.

Next Steps: Search for a Local Attorney

Contact a qualified attorney.