Yes, you can end up in jail for hiding income from the IRS.
U.S. citizens and residents are required to report all income received from all sources both inside and outside the U.S. Apart from income specifically excluded for tax under the IRS code, all income is taxable.
The consequences of failure to report taxable income on your tax return can range from the assessment of tax, interest, and penalties to federal prison time.
While we have no debtors prison in the U.S. so the inability to pay your taxes is not a jailable offence, you are required to sign your tax return under penalty of perjury and signing a return that does not include all income can be considered fraud, depending on the amount of underreporting.
Here are some names you may know that found out just what can happen if you lie on a U.S. tax return.
Al Capone: The infamous American gangster, Al Capone, was not ultimately convicted for his criminal activities but for tax evasion. In 1931, he was sentenced to 11 years in federal prison for failing to pay income taxes on his illicit earnings.
Leona Helmsley: The Queen of Mean, a New York City real estate businesswoman, was convicted of tax evasion in 1989. She was accused of fraudulently billing personal expenses as business expenses. Helmsley served 18 months in federal prison.
Richard Pryor: A well-known comedian was convicted of tax evasion in 1974. He failed to report a substantial amount of income and was sentenced to three years in prison, although he served only 10 months.
Wesley Snipes: The actor was convicted of tax evasion in 2008. He was found guilty of failing to file tax returns and pay federal income taxes for several years. Snipes was sentenced to three years in federal prison and served approximately two and a half years.
Mike Sorrentino: A cast member of MTV’s “Jersey Shore,” pleaded guilty to tax evasion in 2018. He was sentenced to eight months in federal prison for concealing income and submitting false tax returns.
Remember, you don’t have to be famous to end up in prison. The IRS has a criminal investigation division that investigates tax fraud cases referred by tax auditors and others, most of which are ordinary individuals who felt the tax laws did not apply to them.