What Are the Penalties of Perjury for an IRS Statement?

When filing a tax return, you must sign a statement under penalties of perjury, confirming the information is true and complete to the best of your knowledge. This signature transforms the document into a sworn statement, holding you accountable for the information submitted to the Internal Revenue Service (IRS). This forms the legal basis for potential civil penalties or criminal prosecution if the return is found to be false.

The Jurat and Its Significance

At the bottom of Form 1040, above the signature line, is a legal statement known as the jurat. It reads: “Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete.” This declaration legally binds you to the accuracy of the entire tax filing. Altering this language can invalidate the return, as Internal Revenue Code Section 6065 requires all returns to be verified by this written declaration.

For a joint return, both spouses must sign, each taking full responsibility for the entire content of the return, regardless of who earned the income or prepared the document. If a paid preparer completes the return, they must also sign a separate declaration. This statement affirms the return is correct based on all information they have, adding another layer of verification.

Civil Penalties for Inaccuracies

If the IRS determines a tax return contains errors, it can impose civil, monetary penalties without pursuing criminal charges. These are calculated as a percentage of the underpaid tax. The most common is the accuracy-related penalty under Internal Revenue Code Section 6662, which is 20% of the underpayment for reasons like negligence or a substantial understatement of income tax.

A substantial understatement occurs if the understated tax is more than 10% of the correct tax or $5,000, whichever is greater. For example, if a correct tax liability of $20,000 was underpaid by $6,000, a $1,200 penalty could be assessed. The IRS can waive this penalty if the taxpayer shows there was reasonable cause for the error and they acted in good faith.

A more severe civil penalty applies in cases of fraud. The civil fraud penalty, under Internal Revenue Code Section 6663, is 75% of the underpayment portion attributable to fraud. The IRS has a higher burden of proof and must show by clear and convincing evidence that the taxpayer intended to evade taxes. If fraud is proven on any part of the underpayment, the entire underpayment is presumed fraudulent unless the taxpayer proves otherwise.

Criminal Prosecution for Willful Violations

Signing a tax return known to be false can lead to criminal prosecution, carrying the risk of substantial fines and imprisonment. The element the government must prove is “willfulness,” which means demonstrating an intentional and voluntary violation of a known legal duty. An honest mistake or a good-faith misunderstanding of tax law is not considered willful.

Two criminal statutes related to false filings are tax evasion and filing a false return. Tax evasion, under Internal Revenue Code Section 7201, is a felony involving a willful attempt to evade tax and requires proof of a tax deficiency. A conviction can result in fines up to $250,000 for an individual ($500,000 for a corporation) and imprisonment for up to five years. Filing a false return, governed by Internal Revenue Code Section 7206, is also a felony but does not require proof of a tax deficiency, focusing instead on the false statement itself. Penalties include fines up to $250,000 for an individual and imprisonment for up to three years.

Correcting a Return After Signing

If you discover an error after filing your return, you can correct it by filing Form 1040-X, Amended U.S. Individual Income Tax Return. This form is used to correct previously filed Forms 1040, 1040-SR, or 1040-NR. Filing an amended return can help mitigate potential penalties and interest by correcting the mistake before the IRS discovers it.

To complete Form 1040-X, you will need your original return, the corrected figures, and any new supporting tax forms. The form requires you to show the original figures, the net change, and the corrected amounts, along with a detailed explanation of the changes. A Form 1040-X must be filed within three years from the date the original return was filed or within two years from the date the tax was paid, whichever is later. If you owe more tax, it should be paid with the form to limit interest and penalties. If the amendment results in a refund, the IRS will issue it after processing, which can take several months.