Believe it or not, it is a crime to willfully not file your tax return, pay tax or estimated tax, keep records, or supply information required by the laws or regulations. IRC Sec. 7203 makes it a misdemeanor to willfully not carry out the duties listed above.
IRC Sec. 7203 misdemeanor is a lesser offence than Section 7201 felony of evading taxes because IRC Sec. 7203 involves the omission of a statutory requirement rather than an actually act of evasion. This means that a misdemeanor failure to file can evolve into a felony tax evasion if there is also an affirmative act of evasion. This act of evasion can arise from any number of situations; an example would be the intentional concealment of assets from the IRS.
Willful Failure to File Conviction
In order for the IRS to convict a taxpayer under IRC Sec. 7203, the government must prove:
1. There was income of the taxpayer sufficient to require filing of a return or payment of tax
2. Knowledge of the tax return filing or payment requirements
3. Failure to file or pay when the taxpayer had the ability to do so
It is important to note that it can be difficult to prove willfulness without proving a substantial tax liability. This is because it is hard to show that the taxpayer was actually thinking in a way that was willful. One example that would prove willfulness would be if the taxpayer did not file their tax return but at the same time had a very lavish lifestyle.