Sometimes at the slightest hint of a problem with their taxes, clients’ fear of the government prompts them to ask “I won’t go to prison, will I?” If you make an honest mistake or have a unique situation where the facts aren’t entirely clear, you may be facing some penalties and interest, but you needn’t be worried about jail time.

However a recent case decided in District court picked up a couple local business people who went too far… two adult entertainment execs from Cypress, CA plead guilty to deliberately falsifying tax returns. The business, Universal Media Management was in the business of providing live adult entertainment to customers for cash payments (I thought that was illegal in California anyway). Apparently that cash was deliberately underreported, and caused the business to underpay its taxes by about $140,000, and the owner of the business underreported his taxes by $33,000.

The key here is DELIBERATELY, and for their efforts the two responsible, the owner and a key employee, are both facing up to 3 years of quality time in Federal housing.

Read more tax articles from Paul’s tax blog