Earlier today, as some of you may be aware, former hip-hop star known as “Ja Rule” was sentenced to two (2) years in a New Jersey prison for failing to file income tax returns. According to the New York Times blog, he failed to pay taxes on approximately $3 Million, shorting the government of nearly $1.1 Million in taxes. (Click here for link to Story).

Legally speaking, because there are penalties for both Failing to file taxes and Failing to pay taxes, on top of serving prison time, Ja Rule could end up paying much more than just the $1.1 Million. Under Section 6651 of the Internal Revenue Code, the IRS can charge civil penalties of up to 5% of the tax due for one’s Failure to file, per month, up to 5 months (25% in the aggregate). In addition, Section 6651(a)(2) authorizes the IRS to assess additional interest (on top of the failure to file penalty) of 0.5% for the first month, for Failure to pay the tax due. Not to mention, if such Failure to pay or Failure to file is determined to be the result of fraud, the IRS may increase the penalties even more, up to 15%, per month, for 5 months (75% in the aggregate), and can seek criminal penalties under section 7203 of the Internal Revenue Code. Perhaps worst of all, interest will accrue from the time the tax is owed until the time it is paid. And we all know the phrase that concerns the “two things in life that are certain.” In other words, they will be paid, and until they are interest will accrue.

Of course, failure to pay and failure to file are not the only tax offenses to fear. Some other tax offenses include “tax Evasion” (26 U.S.C. § 7201); “Filing a False Tax” (26 U.S.C. §7206(1)); “Aiding or Assisting in the Preparation of a False Tax Return” (26 U.S.C. §7206(2)); “Delivering or Disclosing a False tax Document” (26 U.S.C. § 7207); “Attempting to Interfere with Administration of Internal Revenue Laws” (26 U.S.C. § 7212(a)); “Conspiracy to Commit Tax Evasion” (18 U.S.C. § 371); “Conspiracy to Defraud the Internal Revenue Service” (18 U.S.C. § 371); and “Filing a False Claim for Refund” (18 U.S.C. § 286-287).

Needless to say, tax law can be tricky, even messy, and often times these Failures can be inadvertent, but when they happen it is important that you seek competent legal assistance whether you are a business or individual, even Ja Rule.