26 USC 7201 Tax Evasion Penalties
IRS Criminal Investigation just contacted you. Maybe a target letter arrived. Maybe agents showed up at your business with badges and questions. You’re googling “26 USC 7201” at 2 AM because federal prison — actual federal prison — is suddenly a real possibility. Your hands are shaking. Sleep is impossible. You need answers right now about what happens next.
Thanks for visiting the Spodek Law Group website. We’re a second generation law firm managed by Todd Spodek. We have over 40 years of combined experience handling federal criminal cases coast to coast. Todd Spodek represented Anna Delvey — you saw it on Netflix. We’ve handled cases others said were unwinnable.
They’ve Been Watching You
The investigation didn’t start yesterday. IRS Criminal Investigation has been building this case for months — sometimes years — before you ever knew. They’ve analyzed your bank records. They’ve reviewed your tax returns going back six years. They’ve interviewed your accountant. They might have talked to former business partners. According to IRS-CI procedures, agents spend an average of 18 months investigating before making contact. You’re just finding out now, but they’ve been watching for a long time.
By the time they contact you, they know everything.
The Willfulness Problem
Not everyone who owes taxes goes to prison. Not even close. The DOJ Tax Division prosecutes about 1,500 tax cases per year out of millions who owe. What separates criminal from civil? Willfulness. The government must prove you knew you had a tax obligation and you intentionally tried to defeat it. This is harder than it sounds — for them. Good faith belief destroys willfulness. If you genuinely believed your tax position was correct — even if you were wrong — that’s not criminal. Reliance on professional advice can negate willfulness. If your accountant or lawyer told you something was deductible and you relied on that advice, you lack criminal intent. Mental health issues, addiction problems, family crises — these can all demonstrate lack of willfulness. The government needs to prove you acted with deliberate intent to violate a known legal duty.
The actions that prove willfulness and land people in prison are specific. Lying to IRS agents when they interview you. Using fake names or social security numbers. Moving money through multiple accounts to disguise the source. Asking people to lie for you. Destroying records after learning about the investigation. Creating backdated documents. These actions show consciousness of guilt. Tax evasion — unlike simple non-payment — requires willfulness. 26 USC 7201 makes it a felony to willfully attempt to evade or defeat any tax. The government doesn’t care that you owe money. Many, many people owe the IRS money. What triggers criminal prosecution is the attempt to hide it. Using nominee accounts. Filing false returns. Keeping two sets of books. Destroying records. These are the acts that transform a civil tax matter into a criminal investigation with potential prison time.
Unlike other law firms who immediately talk about plea deals, we look for ways to challenge the willfulness element — because without it, there’s no crime. We’ve handled many, many federal tax cases. We know what arguments work and — more importantly — what doesn’t. The difference between civil and criminal is everything. One means payment plans and penalties. The other means federal prison.
Your Next 30-60 Days
Right now — before any charges are filed — is your most critical window. The government is deciding whether to prosecute.
This decision happens at multiple levels. The IRS-CI special agent recommends prosecution or declination. Their supervisor reviews it. IRS counsel weighs in. Then it goes to the DOJ Tax Division in Washington. Multiple people must agree to prosecute. This process takes 30-60 days typically. These are the days that determine everything.
Then there’s voluntary disclosure.
Only works if you haven’t been contacted yet. Once they reach out, it’s too late for that option. But other doors remain open. Your attorney can present evidence of good faith. Show reliance on professional advice. Demonstrate personal circumstances that explain the situation. Challenge their calculation methods. According to DOJ Tax Manual, prosecutors must consider all evidence — including evidence that helps you. This is your window to provide it. We’re available 24/7 during this critical period — because prosecutors don’t wait.
What Actually Happens to People
Forget the statutory maximum of five years. Federal sentencing guidelines determine what really happens.
Tax loss drives everything. Under $100,000 in tax loss? You’re looking at probation to 12 months typically. Between $100,000 and $550,000? That’s 12-30 months usually. Over $550,000? Now we’re talking 30-48 months realistically. Over $3.5 million? That’s 48-72 months territory.
September 2025 cases show the pattern. A Florida businessman with millions in unreported income — indicted. A Massachusetts tax preparer filing false returns — 18 months prison. A Nevada scheme promoter — guilty plea pending sentencing.
Beyond prison, there’s restitution — you pay back everything plus interest and penalties. There’s supervised release — typically 1-3 years after prison. Professional licenses gone. Security clearances revoked. Immigration consequences for non-citizens. Banking restrictions. Employment challenges with a federal conviction. The conviction follows you forever.
Stop talking to everyone except your attorney. Not your accountant. Not your business partner. Not your spouse about specifics. Everyone can be forced to testify against you except your lawyer. That helpful accountant becomes a government witness. Your business partner gets immunity to testify. Even spouses can be compelled to testify about business matters.
Preserve everything — destroy nothing. The worst thing you can do now is delete emails, shred documents, or “clean up” your records. Obstruction of justice carries up to 20 years. That’s four times the tax evasion penalty.
Get representation immediately — but choose carefully. You need someone who knows federal criminal tax defense specifically. Not your business lawyer. Not your divorce attorney’s criminal law partner. Someone who’s been in federal court, who knows the DOJ Tax Division prosecutors, who understands how these cases really work. Todd Spodek has been defending federal criminal cases for over 15 years. National media covers our cases — from the Netflix series about Anna Delvey to coverage in the NY Post, Newsweek, and Fox 5. We’re one of the few firms with a completely digital portal for secure communication and document sharing. This matters when the government is watching. We handle federal cases coast to coast — from the Southern District of New York to the Central District of California.
Your freedom is on the line. Your professional reputation hangs in the balance. Your family’s financial future is at stake. The government has been preparing for months — many, many months of investigation before they contacted you. You have days — maybe weeks — to respond effectively. We’re available 24/7 because federal investigations don’t follow business hours.
Call 212-300-5196 right now.