Springtime in North Carolina brings a number of stressors, including filing tax returns. Although this year’s state and federal tax deadlines have been extended, you’re still responsible for taking care of both returns, federal and state, as well as paying tax amounts. North Carolina is also considering eliminating tax penalties due to the COVID-19 pandemic. Not paying your taxes is considered tax evasion.
When you don’t complete your tax returns and fail to pay state taxes, you’re actually breaking the law. However, the penalties will depend on whether you made an honest mistake, or you deliberately committed fraud to avoid paying taxes.
It is possible to receive jail time—and incur a criminal record—for not paying your state taxes.
North Carolina General Statutes Ch. 105 addresses the intentional failure to pay one’s state income taxes. According to the statute, “willful failure” is a Class 1 misdemeanor, which can include jail time of as much as 120 days, as well as a discretionary fine.
The penalties for willful failure include:
- 5% penalty per month, up to a maximum of 25% of the balance due
- 10% late penalty
- 20% “collection assistance” fee if you don’t pay within 90 days
- An additional 50% “fraud penalty” upon conviction
Penalties can also include tax liens against properties and a damaged credit record.
Tax preparers who participate in willful failure or other misleading tax schemes can also be charged. Filing a “frivolous return” also incurs penalties, including a $500 fine.
Tax fraud or tax evasion is the intentional act of submitting false and/or misleading information on a tax return in order to change the amount owed. Both the federal government and the state of North Carolina have penalties for purposely committing tax fraud.
In addition to the above sanctions, any actions that lead to under-paying state income taxes is a Class H felony, which carries potential jail time from 4 to 24 months. A conviction will also bring substantial financial penalties including fines and interest, as well as an additional 50% penalty of the defrauded amount.
It happens and is correctible. Making a mistake is not the same as a willful failure or intentionally committing fraud.
If you’ve made a mistake on your tax return, it’s easy to file an amended one. For a 2019 return, you’ll fill in the circle on Form D-400 indicating that you’re filing an amended return. Complete and attach the Form D-400 Schedule AM for a North Carolina Amended Schedule to the front of Form D-400. Then attach all the required schedules and supporting forms.
Call Dewey P. Brinkley For Financial Crimes Defense
You really can go to jail for as long as 120 days for willful failure to file your North Carolina tax return.
If you’ve been charged with willful failure, tax evasion, or any financial crimes, you’ll need the help of a financial crimes defense attorney immediately to avoid a potential jail sentence, fines, and penalties, along with a permanent criminal record.