QUESTION

Did I commit a w 4 felony without knowing it?

Asked on Mar 16th, 2012 on Taxation - Alabama
More details to this question:
I just found out that providing false information on your w-4 is illegal and my employee told me it was fine, that it would even out in the end. I owe the IRS 2000 dollars, i haven't been charged with any penelty but i'm terrified of having unknowingly put myself in danger. I never been to jail before, it says you can get one year jail time for this? Can that still happen if I make monthly payments to pay back? I claimed off and on too many allowances during a few years now. I am very worried cause I might also be forced to apply for bankruptcy, will this put me at risk of them "finding out" and then deny me on the bankruptcy as well as charge me? I have plans to move out of the country to my partner, would that stop it? How long could this stay on my record?
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2 ANSWERS

Donald B. Lawrence
Without further detail as to the amounts involved, the range of the unsupported withholding exemptions claim and the amounts involved, it is very difficult to give you concrete answers. Generally, it has to be a tax protest scheme, something fairly outrageous, for the IRS to consider referral for prosecution. $2,000.00 does not sound like it would rise to the level of criminal prosecution. The grounds for denial of discharge in bankruptcy do make reference to taxes but since these liabilities are older, income tax liability is generally not exempt from discharge after being 3 years old or older. I am not sure why you think that your potential liability would be a basis for keeping you from leaving the country unless you think that you would be incarcerated for non-payment of the $2,000.00 in taxes that you indicate you owe. That would seem to be unlikely since the cost of prosecution and jailing you, even as an example, would outweigh the benefit of making you an example.
Answered on Mar 20th, 2012 at 9:12 AM

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Tax Law Attorney serving Birmingham, AL at Meadows & Howell, LLC
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It is highly unlikely that the I.R.S. will attempt any criminal charges or seek any jail time. Even if the information on your Form W-4 was incorrect, the I.R.S. would have to show that the information was intentionally submitted in an incorrect manner so as to evade taxes. Because proving intent is a time-consuming task, the I.R.S. generally only requires that the amount owed be paid. If you are unable to pay the amount owed at the time that your return is filed, then you will incur a civil penalty that is the equivalent of a late payment fine or charge. However, this penalty is not criminal in nature; it's similar to a late payment fee on a credit card or loan. You can set up an installment agreement with the I.R.S. so that you can pay off the balance and any applicable penalties and interest with monthly payments. Once the debt is paid off, there will be nothing else that needs to be done. The I.R.S. will have a record of the fact that you were late on your payment of this particular year's taxes due, but it's not something that shows up on your criminal record, nor will it be something that employers would find in a standard search of your history. I would not attempt to get away from this matter by leaving the country, as it is a very basic problem that many people deal with, and it is easily resolved without any sort of significant detriment to you or your record.
Answered on Mar 20th, 2012 at 8:05 AM

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