Will My Job Alert the IRS About All of My Income?News, Offshore Account Update
Posted in on June 30, 2023
As a U.S. taxpayer, you are required to report your income to the Internal Revenue Service (IRS). You must report your income annually, and when you file your annual tax return, you must pay any tax you owe.
Your employer is required to report your income as well. Under the Internal Revenue Code, employers must report their employees’ income in all forms—including wages or salary, tips, commissions, bonuses, and any other forms of employee compensation. If your employer withholds income and FICA taxes from your paychecks, it must also report these withholdings (and pay them over to the IRS) on a quarterly basis.
What Happens if You Don’t Report Your Income to the IRS?
Since your employer most likely reports your income to the IRS (some unscrupulous employers may choose not to report their income or payroll in an attempt to illegally avoid tax liability), what will happen if you don’t file an annual return? The short answer is: You will be at risk of facing scrutiny (and penalties) from the IRS.
The IRS Imposes Penalties for Failure to File and Failure to Pay
Under the Internal Revenue Code, taxpayers can face penalties for both “failure to file” and “failure to pay.” As a result, even if you don’t owe any additional tax (beyond your employer’s withholdings from your paychecks), you can still be penalized for failing to file a return. Once your employer reports your income, the IRS will know if you don’t file a return—and it may audit you to make sure you meet your federal income tax obligations.
Intentionally Underreporting Your Income Can Lead to Criminal Charges
If the IRS determines that you have intentionally underreported your income in an effort to avoid paying taxes, you could be charged with criminal tax evasion. This is a serious federal crime. If you are convicted of tax evasion, you will have a federal felony on your record, and you could be sentenced to up to a $100,000 fine and five years of imprisonment.
You Will Need to Choose Your Next Steps Carefully
Given these risks, if you have failed to report your employment income to the IRS, you need to be very careful. While you need to report your income and pay any taxes, interest and penalties you owe, you also need to avoid putting yourself in an even more dangerous position. Submitting a delinquent income tax return can raise red flags at the IRS, and while there are other options available, these options all present their own risks as well.
Schedule a Consultation with Tax Lawyer Kevin E. Thorn in Virginia
Do you need to know what to do about reporting your income to the IRS? If so, we encourage you to contact us promptly for more information. To schedule a consultation with tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group in Virginia, please call 703-752-3752 or tell us how we can reach you online today.Share This Post