20+ Tax Evasion Statistics: Don’t Even Think About Not Paying Your Taxes

Written by Ashley FranklinUpdated: 30th Mar 2022
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No one likes to pay taxes, but it’s something that we all have to do. And while tax evasion is illegal, plenty of people still try to avoid paying their fair share.

If you’re thinking about cheating on your taxes, you should know that there are serious consequences.

The IRS is cracking down on tax evasion more than ever before. What’s more, the IRS has several tools at its disposal to catch tax evaders, including data matching, undercover investigations, and informant rewards.

This article will look at 20+ tax evasion statistics that every taxpayer should know. We will also explore the various methods the IRS uses to catch tax evaders and the penalties they face.

Keep reading to learn more about tax evasion and what you can do to avoid it.

#1. IRS Agents examine only 1 Out of Every 333 Tax Returns

Out of every 333 tax returns filed, only one is typically selected for an IRS audit. Thus, the IRS audited approximately 0.003% of all individual tax returns in 2018.

While the odds of getting audited may seem low, certain factors can increase your chances. For example, if you’re a high-income earner, have a complex tax return, or claim many deductions, you may be more likely to get audited.

#2. Tax Returns with Income Less Than $200,000 Are Audited Less Than 1% of the Time

The IRS audits less than 1% of all tax returns. So, unless you’re intentionally doing something to trigger an audit (like claiming many questionable deductions), you’re probably not going to get one.

Of course, if you do get audited, it can be a pain. The good news is that the IRS has to have a reason to believe that you owe additional taxes before they can start digging into your finances. If you’re honest on your return, there’s nothing to worry about.

#3. For Those Earning $1 Million or More, That Percentage Rises to 10% or More

If you’re earning $1 million or more, be prepared to face a higher audit percentage. The IRS has been increasingly flagging high earners for audits in recent years. So, if you find yourself in that income bracket, it’s a good idea to start saving your receipts and documentation.

Of course, there are some exceptions to the rule. For example, if you have a simple tax return with few deductions, you may not be as likely to get audited. But if your return is complex or you claim several deductions, your chances of getting audited go up.

#4. The U.S. Loses $1 Trillion Each Year to Tax Fraud

The United States loses a whopping one trillion dollars each year regarding tax fraud. That’s a lot of money! And unfortunately, the IRS doesn’t have the resources to catch all the fraudsters.

It’s not that the IRS is inefficient; there’s only so much money and manpower available to go after such a vast and amorphous problem. And though Congress has given the agency more money in recent years to hire additional auditors and beef up its anti-fraud efforts, it hasn’t been enough to make a dent in the amount of fraud being committed.

#5. Approximately 240 million Tax Returns Are Processed Each Year by the IRS

That’s a lot of paperwork! Fortunately, the IRS has some pretty impressive technology to help streamline the process.

However, due to the enormous volume of returns, the IRS does make mistakes from time to time. That’s how many honest taxpayers end up getting audited. If you think the IRS has made a mistake on your return, don’t hesitate to reach out and ask for help.

#6. Over $12 Billion in Expenses Are Incurred by the IRS Each Year

It’s no secret that the IRS is responsible for collecting a lot of money every year. But what may come as a surprise is just how much money the IRS spends each year. According to recent estimates, the IRS spends more than $12 billion annually on various activities and programs.

So, where does all that money go? A large chunk of it goes towards staffing and operating the various IRS offices around the country. Another big expense is technology-related, with the IRS spending millions each year on computer systems and software. And then there are all the other miscellaneous expenses, from postage and printing to travel and training.

#7. Taxes Paid to the IRS for 2020 Amounted to Nearly $3.5 Trillion

Two hundred forty million returns amounted to nearly $3.5 trillion in taxes paid to the IRS for 2020. That’s a lot of money! It’s more than the GDP of countries like Spain, Canada, or Australia.

Interestingly, the amount of taxes paid has increased steadily over the past few years. For example, in 2020, taxes paid were about $1 trillion more than in 2010. This may be due to several factors, such as an increase in income levels or changes in tax policy.

#8. It Is Estimated That the Rich Avoid $163 Billion in Taxes Each Year

As far as shrewd financial practices go, avoiding taxes is right at the top. And when it comes to tax avoidance, the rich are in a class of their own.

It is estimated that the wealthiest individuals and corporations in the world manage to avoid paying around $163 billion in taxes each year. A big chunk of this money goes into offshore accounts like the Cayman Islands, Switzerland, and Luxembourg.

While there are perfectly legal ways to minimize your tax bill, such as taking advantage of deductions and investing in tax-advantaged vehicles like 401(k)s, what the wealthy are doing is often beyond what’s considered legal.

#9. Nearly 80% of Tax Fraud Offenders Did Not Have Any Previous Criminal Records

Nearly 80% of tax fraud offenders did not have previous criminal records. This statistic may surprise some, but it makes sense when you think about it.

A lot of tax fraud is committed by otherwise upstanding citizens. They may have a good job, a lovely family, and no prior criminal history. But for whatever reason, they decide to commit tax fraud. Maybe they’re in financial trouble and think this is the only way out. Or perhaps they’ve heard that others have gotten away with it and believe they can too.

Whatever the reason, these people typically don’t have any previous criminal history.

#10. 9 Out of 10 Tax Fraud Offenders Are Citizens of the U.S.

No surprise there! Most tax fraud offenders are citizens of the United States. In fact, according to the most recent data from the IRS, about 9 out of 10 tax fraud offenders are American citizens.

This doesn’t mean that everyone who commits tax fraud is American. There are plenty of non-American citizens who commit tax fraud as well. However, most offenders are American citizens.

#11. Taxes Are Every Citizen’s Civic Duty According to 94% of Americans

94% of Americans believe that paying taxes is a civic duty, something that all citizens should do to support the country. And while some people may grumble about writing out their tax forms or handing over a big chunk of their paycheck each month, most of us see it as an essential responsibility.

There’s a good reason we feel that way. Taxes pay for the things that make our lives better – from roads and bridges to schools and hospitals. They also help fund vital public services like police and fire protection. So, when we don’t pay our taxes, we’re not just cheating the government. We’re cheating ourselves too.

#12. However, 13% of People Believe That Cheating on Your Taxes a Little Bit Is Okay

Innocent until proven guilty, right? In the case of tax evasion, the IRS assumes you’re guilty until you can prove otherwise. And while it’s not exactly a felony to fudge your taxes a little bit, it’s still frowned upon by most people (except for that 13% who think it’s okay).

#13. For Tax Returns Filed in 2020, the IRS Assessed Nearly $31.4 Billion in Civil Penalties

Yep, it’s true. The Internal Revenue Service assessed nearly $31.4 billion in civil penalties for various crimes in 2020. That’s a lot of money!

It’s worth noting, however, that the majority of these penalties were assessed for tax fraud, failure to file, and failure to pay taxes owed. So, if you’re looking to avoid a hefty fine from the IRS, make sure you pay your taxes on time and don’t commit fraud!

#14. The United States Sentenced 593 People for Tax Crimes in 2020

593 people were sentenced for tax crimes in 2020. This number is down from the 848 people convicted in 2019 and the 1,052 people convicted in 2018.

While there are various reasons why this number might be trending downward, it is critical to note that the IRS is getting better at catching and prosecuting tax crimes.

With sophisticated data analytics and an increased focus on tax enforcement, the IRS can identify and prosecute more tax criminals.

#15. The Average Tax Fraud Sentence Is 3-5 Years in Prison

It’s a severe crime, and the punishment should fit the crime. Tax fraud can result in significant losses for the government, so it’s crucial that anyone caught committing this offense is held accountable. The average sentence for tax fraud is 3-5 years in prison, which is appropriate given the severity of the crime.

#16. Walter Anderson, American Entrepreneur, Committed More Than $200 Million in Tax Fraud

Walter Anderson was a successful American entrepreneur who, in the early 2000s, was caught hiding more than $450 million in earnings from the IRS. To avoid paying taxes on this money, Anderson had created a complex web of shell companies and dummy bank accounts that allowed him to funnel his profits offshore.

Unfortunately for Anderson, the IRS eventually uncovered his elaborate tax fraud scheme.

#17. A Billionaire Named Robert Brockman Hid More Than $2 Billion From the IRS

A billionaire by the name of Robert Brockman managed to hide more than $2 billion from the IRS over 20 years. How did he do it? By funneling his capital gains income through a web of offshore trusts and bank accounts.

This was a very elaborate scheme, and it’s believed that he was able to get away with it because he employed an army of accountants and lawyers who could help him stay one step ahead of the IRS. However, Brockman was caught and had to pay a hefty penalty for his tax evasion.

#18. American’s Largest Corporations Hold Over $2.1 Trillion in Cash Offshore to Avoid Taxes

It’s no secret that America’s largest corporations are holding an unprecedented amount of cash offshore – over $2.1 trillion, to be precise.

And while some people might argue that this money is being held offshore for legitimate reasons (such as to fund foreign investments or to protect the companies from unstable economies), these corporations are stashing their money abroad is simple: to avoid paying taxes.

#19. In 2021, the IRS Conducted Over 2,500 Criminal Investigations

Criminal Investigation (CI) is a division of the Internal Revenue Service (IRS) that investigates potential criminal cases of tax evasion, money laundering, and other financial crimes. The CI also works with state and local law enforcement agencies on joint investigations.

#20. In the Same Year, It Had a Conviction Rate of Nearly 90%

The Internal Revenue Service (IRS) is pretty darn efficient in convicting people of violating the Internal Revenue Code. In fact, in 2021, the conviction rate was nearly 90%. That means that out of every 100 people charged with violating tax law, 90 of them were convicted.

#21. 72% of IRS Criminal Investigative Agents’ Time Is Spent Investigating Tax-Related Crimes

It’s no secret that the IRS is serious about investigating tax-related crimes. In fact, according to recent reports, 72% of Criminal Investigative Agents’ time is spent investigating tax-related crimes such as tax evasion and fraud.

So, if you’re thinking about cheating on your taxes, it’s important to remember that you’re not just up against the IRS – you’re up against a team of highly skilled investigators who are determined to crack down on tax cheats.

Frequently Asked Questions

How Common Is Tax Evasion?

Tax evasion is a serious crime, but it’s also fairly common. According to the IRS, the U.S. government loses an estimated $1 trillion per year from tax evasion. That’s a lot of money!

But although tax evasion is widespread, very few taxpayers go to jail for it. In fact, in 2020, only 593 people were convicted of tax evasion. That may sound like a lot, but considering more than 240 million taxpayers in the U.S., it’s not that many people.

Who Commits the Most Tax Evasion?

There is no surefire answer to this question since tax evasion is, by definition, illegal and, therefore, secretive. However, there are some patterns that we can discern when it comes to who is most likely to commit tax evasion.

Generally speaking, the richer you are, the more likely you will engage in tax evasion. This is because wealthy individuals and corporations have the resources and means to hire sophisticated tax attorneys and accountants who can help them exploit loopholes and find ways to avoid paying taxes.

In addition, large corporations are also more likely to engage in tax evasion than small businesses or individual taxpayers. This is primarily because they have complex financial structures and transactions that allow them to take advantage of tax laws in ways that smaller entities cannot.

How Much Tax Evasion is in the United States?

There’s no easy answer to how much tax evasion occurs in the United States. But experts believe that the tax gap – the difference between what taxpayers owe and what they pay – has been growing in recent years.

One estimate from the Internal Revenue Service (IRS) suggests that the average tax gap is around $441 billion. That’s a considerable sum, but it’s also just an estimate – and it doesn’t take into account some forms of tax evasion that are harder to measure.

How Big is the Problem of Tax Evasion?

While we don’t know exactly how much tax evasion is going on, we do know that it’s a significant problem. And as the federal government tries to close the budget deficit, addressing tax evasion will be crucial.

Bottom Line: Tax Evasion Statistics

Tax evasion is a serious crime resulting in hefty fines and even jail time. But it’s also reasonably common, particularly among wealthy individuals and large corporations. And although the IRS has been working hard to crack down on tax evasion, the problem is still sizable.

But, if you’re thinking about not paying your taxes, think again. The consequences could be more severe than you imagined. And remember, the IRS is getting tougher on tax evasion every day. So don’t take the risk – pay your taxes and do it honestly!

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Ashley Franklin
Ashley Franklin

Ashley Franklin is a professional writer and financial literacy expert. Ashley double-majored in Computer Science and Communications, and she brings her talents to the forefront with writing about personal finance and investing. Having worked with renowned international websites and publications, Ashley has found that there’s no one-size-fits-all solution to financial management. That’s why her articles are all about finding what works for you.