Tax evasion or making fraudulent claims on your business tax returns is a serious crime on both the federal and state levels. In Texas, if you engage in either activity, you risk going to jail and having your business exposed as a criminal operation. To avoid such outcomes, it is essential that you understand the state’s tax evasion laws. FindLaw explains the various charges associated with tax fraud and the penalties of a conviction.

You commit tax fraud when you engage in fraudulent acts regarding bookkeeping. Such actions may include using technology to falsify your sales records, failing to enter all sales records or failing to produce all documents when the IRS requests them of you. Tax fraud also involves failing to pay the comptroller the sales taxes you collected from sales or using automated sales suppression devices to create false electronic records, such as transaction reports.

The penalties associated with tax fraud are steep, though they do vary depending on the particular type of fraud in which you engaged and how much in taxes you evaded. Failure to pay taxes may result in the following:

  • Class C misdemeanor if you owe less than $50
  • Class B misdemeanor if you owe more than $50 but less than $500
  • Class A misdemeanor if you owe more than $500 but less than $1,500
  • State jail felony if you owe more than $1,500 but less than $20,000
  • Third-degree felony if you owe more than $20,000 but less than $100,000
  • Second-degree felony if you owe more than $100,000 but less than $200,000
  • First-degree felony if you owe more than $200,000

The consequences associated with a state jail felony include between 180 days and two years in prison. Both a second- and third-degree felony carry a minimum prison term of two years, while a first-degree felony has a minimum prison sentence of five years.

If you falsify records or fail to record sales, the state may charge you with a third-degree felony. If you use an automated sales suppression device or phantom-ware, you face state felony jail charges.

The contents of this article are not meant to serve as legal advice. They are for your educational purposes only.