24/7 call for a free consultation 212-300-5196




When you’re facing a federal issue, you need an attorney whose going to be available 24/7 to help you get the results and outcome you need. The value of working with the Spodek Law Group is that we treat each and every client like a member of our family.

What are the penalties for lying during a government audit?

Penalties for Lyin’ During a Government Audit

So you’re bein’ audited by the government. Could be the IRS lookin’ at your taxes. Could be HUD reviewin’ your use of public housing grants. Heck, maybe the EPA wants to see if your factory is dumpin’ sludge in the river.
Point is, the heat is on. Now, I know it’s temptin’ to fudge the truth a bit to cover up any, uh, discrepancies they might find. But let me give you some straight talk: lyin’ to federal auditors is a big no-no that can land you in boiling hot water.

Ya Can’t Obstruct the Audit

Number one rule is you can’t try to derail the audit itself. This is known as “obstruction of a Federal audit” and it’s illegal under Section 1516 of the federal code.
Specifically, you can get a 5 year prison sentence if you “endeavor to influence, obstruct, or impede a Federal auditor.” Now, what exactly does that mean? Well, if you:

  • Hide or destroy documents the auditors request
  • Tell other employees to not cooperate with the audit
  • Make threats to try and get the auditors to back off

…you’re lookin’ at obstruction charges. Even if the audit continues and no real harm comes from it, merely trying to interfere is enough to break the law.
This comes up a lot when the feds are auditin’ housing programs. Like if a construction company lies about meetin’ accessibility requirements for disabled residents, and then tries to cover it up when HUD comes knockin’.
The obstruction charges alone can lead to years in prison, massive fines, and gettin’ banned from doing business with the government ever again. Simply put, when the auditors show up, you gotta let ’em do their job.

Don’t Lie or Cover Up Mistakes

Now, say the auditors find some legit issues in your paperwork. Maybe you misstated some expenses on your taxes. Or your factory was dumping dirty wastewater without a permit.
When they confront you with this info, your first instinct might be to play dumb, shade the truth, or flat out lie about what happened. “Who me? Must be some kinda mistake!”
That’s called making “false statements” and it’s a crime under federal law.
You can get up to 5 years in prison just for lying during the audit, even if you’re covering up something pretty minor. And if your lies cause the government to lose money, like paying out grant funds you weren’t entitled to, the penalties get even worse.
Prosecutors can hit you with “false claims” charges under the False Claims Act. Now you’re on the hook to pay back triple damages to the government.
These penalties apply even if the lies seemed harmless at the time. Maybe you were just tryin’ to tell the EPA “what they wanna hear” about your factory’s emissions. Don’t matter. Still illegal.
Moral of the story: when them auditors show up, you gotta come clean about any mistakes. Coverin’ up problems or lyin’ about ’em only makes the situation 1000 times worse.
And don’t think you can outsmart the auditors neither! Any false info you give, even minor lies that don’t seem related to the main issues – all that can come back to bite ya if prosecutors decide to pursue charges later on.

It Ain’t Just About the Audit

Now here’s the scary part: lyin’ to auditors or obstructin’ their investigation can lead to even more serious charges down the road.
See, anytime you lie to federal agents, that’s considered “obstruction of justice.” By lyin’ about whatever misconduct the auditors found, you’re interferin’ with the government’s ability to enforce laws and regulations.
And even if the auditors don’t find any major violations at first, lyin’ to ’em can show you got somethin’ to hide. Maybe there’s bribery goin’ on behind the scenes. Or tax fraud the IRS don’t know about yet.
By the time you get in front of a grand jury, now you gotta keep all your stories straight about what you lied about before. It’s a slippery slope. One little lie leads to another until you’re in so deep you can’t keep track of all your BS anymore.
Meanwhile, prosecutors dig deeper into all your dealings, and eventually uncover the whole rotten mess you were tryin’ to keep secret.
Now, suddennly that piddly little audit about wastewater dumping has exploded into a full blown criminal investigation of your entire business. You got the FBI, Department of Justice, IRS, EPA all swarming you like angry hornets.
And when they unravel all the corruption you were involved in, throwin’ your butt in prison for 5 or 10 years is gonna be the least of your worries.

Even “Little” Lies Can be a Big Deal

The point I’m tryin’ to make here is there’s no such thing as a “little lie” when dealing with federal auditors or investigators. They take this stuff real serious.
For example, take a look at what happened to this accountant fella named Jonathan Taylor.
His firm was bein’ audited by the PCAOB to make sure they were properly reviewin’ companies’ financial statements. No huge fraud goin’ on or anything they were lookin’ at.
But when the auditors asked for paperwork on some of the firm’s audits, Taylor panicked. He went back and quietly added or changed about 80 work papers to make it look like the audits were done more thorough than they really were.
Well, the PCAOB caught on real quick. And even though Taylor was just tryin’ to cover up some minor record keepin’ discrepancies – not even any major audit failures – they still:

  • Fined him personally $150,000
  • Fined his firm over a million bucks
  • Banned him from ever working as an accountant again

All that just for lyin’ to the auditors and givin’ em some polished-up paperwork. Dude’s whole career – ruined!
So listen up: when the auditors come knockin’, you gotta give ’em the straight scoop. Admit any mistakes, come clean about any violations…don’t try to sugarcoat nothin’!
‘Cause even “little” lies to cover your behind can explode into federal charges real quick. The cover up is always worse than the original crime, ya know?
Anyway, hope this gives you some insight into stayin’ on the right side of the law when dealing with government auditors. Let me wrap up with a quick recap:

  • Be truthful and cooperate fully with auditors
  • Don’t obstruct the audit in any way
  • Admit and correct any compliance issues
  • Don’t lie or make false statements to auditors

Stick to that, and your audit experience should be nothing more than a minor inconvenience.
But start playin’ games, and you better lawyer up! ‘Cause makin’ false statements or obstructin’ a federal audit is no joke. They will hit you with some very serious felony charges.
And remember, the auditors don’t take kindly to liars and cover-ups. So come clean right away, before your little white lies spiral completely outta control!

Schedule Your Consultation Now