A bill to amend the Internal Revenue Code of 1986 to make the Federal income tax system simpler, fairer, and more fiscally responsible, and for other purposes.
This bill is nearly identical to S. 3018 from the 111th Congress, which was also introduced by Senator Wyden. S. 727 would make a number of substantive changes to the tax code, including increasing the penalties for several offenses involving attempted tax evasion, willful failure to file tax returns, and willful failure to pay taxes due. Under current law, section 7201 of Title 26, U.S. Code, prohibits the willful attempt to evade or defeat a tax. Violations of this provision are currently punishable by fines of up to $100,000 for individuals and $500,000 for corporations, imprisonment for up to five years, or both. S. 727 would increase those penalties to fines of up to $500,000 for individuals and $1,000,000 for corporations, imprisonment for up to ten years, or both. Under current law, section 7203 of Title 26, U.S. Code, makes it a violation for those who are required to pay estimated tax to fail to make a return, keep records, supply information, or pay the estimated tax. S. 727 would increase the criminal fine for violating § 7203 from $25,000 to $50,000 for individuals. In addition, the bill would add a subsection to § 7203 creating the offense of aggravated failure to file, which would consist of failing to make a return for any three taxable years out of any period of five taxable years if the aggregate liability is $50,000 or more or where the failure to make a return involves income “attributable to an activity that is a felony under any State or Federal law.” The offense of aggravated failure to file would be a felony punishable by up to five years imprisonment, a fine of $250,000 for individuals and $500,000 for corporations, or both. S. 727 would also increase the criminal penalty for violating section 7206 of Title 26, U.S. Code, which covers fraud and false statements related to tax returns, tax statements, and other tax documents. The bill would increase the available criminal penalties under § 7206 to a maximum of five years of imprisonment (from three years), fines of $500,000 for individuals (from $100,000) and $1,000,000 for corporations (from $500,000), or both.