Can You Be Prosecuted in Illinois for Failing to Report Foreign Income?

 Posted on July 22, 2025 in Financial Crimes

U.S. citizens and permanent residents are obligated to report their income to the Internal Revenue Service (IRS), including any income earned in foreign countries. If you live in Illinois and fail to report foreign income, you could face serious legal consequences, including criminal prosecution on both a state and federal level.

As of July 2025, aggressive enforcement of tax evasion and fraud laws is on the rise in Illinois. If you are under investigation for failing to disclose foreign income or you suspect a tax issue might become a criminal matter, speak with an experienced Will County, IL criminal defense attorney who has experience handling white collar offenses.

What Does the Law Say About Reporting Foreign Income?

Under federal law, all U.S. taxpayers must report foreign income on their annual tax return. This requirement includes wages, interest, dividends, rental income, and income from foreign investments. Depending on your circumstances and assets, you may also need to file additional forms. Some examples include the FBAR (Foreign Bank Account Report), which is required under the Bank Secrecy Act if you have over $10,000 in foreign accounts, or the Foreign Account Tax Compliance Act (FATCA) Form 8938.

If you do not file these forms and you fail to report your foreign income, you could risk civil penalties, audits, and criminal charges for tax evasion, filing a false return, or willful failure to file.

Does Illinois Impose Criminal Charges for Foreign Income Tax Crimes?

While most tax crimes involving foreign income are prosecuted at the federal level by the U.S. Department of Justice, the Illinois Department of Revenue and local state’s attorneys can pursue state-level charges if the taxpayer also violated Illinois tax law. Under 35 ILCS 5/1301, anyone who willfully attempts to evade Illinois income tax could face felony charges.

In practice, this means that you could potentially be prosecuted for failing to report foreign income on your Illinois state tax return. If you are found guilty of fraud, intentional concealment, or a pattern of deception, the prosecutors might seek felony charges that carry the possibility of prison time and hefty fines.

What Are the Penalties for Failing to Report Foreign Income?

Depending on the facts of the case, penalties could include:

• Civil penalties of up to 50 percent of the account balance per year for FBAR violations

• Federal felony charges under 26 U.S. Code § 7201 (Tax Evasion), which can carry up to five years in prison and fines up to $100,000

• State charges for income tax fraud under Illinois law, potentially classified as a Class 3 or Class 2 felony

• Additional consequences such as loss of professional licenses, reputational damage, and loss of immigration status for non-citizens

Schedule a Free Consultation with a Joliet, IL White Collar Crime Lawyer

If you are facing an audit or investigation related to foreign income, speak with a Will County, IL tax crimes attorney at Komie and Associates. We are dedicated to protecting your rights and developing a strong defense strategy tailored to your case, and we have the experience to prove it.. Call us at 312-263-2800 to schedule your confidential consultation.