Even criminal masterminds like the Joker have to deal with the IRS. In the 1998 episode of The New Batman Adventures, "Joker's Millions," the Clown Prince of Crime gets a visit from the taxman and quickly decides he needs to pay the $137 million he owes. When asked about it, he quips, "I'm crazy enough to take on Batman, but the IRS? No, thank you."
While the Joker is famous for his bits, it seemed as if he was somewhat serious about his fear of the IRS, and Reddit user "Burnnoticelover" caught wind of that. The user recently posted a theory claiming that while the Joker is fine with ending up at Arkham Asylum for the outlandish crimes he normally commits, he will not tangle with the IRS because the insanity defense doesn't work for financial crimes, and he'll go to a real prison. It's an interesting hypothesis, so let's take a closer look to see if it holds any water.
Early in the episode, the Joker complains of having no money and attempts to rob a bank with Harley Quinn. However, Batman and Batgirl thwart them. Upon returning home, the Joker is informed that he inherited a $250-million fortune in the form of money, jewels and gold. Before dying, his old criminal rival Edward "King" Barlowe decided to give the Joker one last gift. The Joker then goes on a wild spending spree, but his jubilation comes to an end when he learns that Barlowe's gift was an elaborate prank. The money and jewels are fake; Barlowe wanted the Joker to owe money to the IRS, or confess that he was fooled, which would ruin his street credibility. With that in the back of his mind, the Joker quickly begins to realize that he may finally be taken down.
The Reddit theory goes on to say the Joker desperately wants to avoid prison because he has made too many enemies over the years, and even if he had no enemies inside, the inmates would target him for being a terrorist and victimizing women and children. The idea seems to be sound given that in response, Joker hatches a plan to steal money from a boat leaving the Gotham Mint without leaving his usual calling cards.
However, this is not a very desperate measure as far as the Clown Prince of Crime is concerned. The Joker is also a very slippery character, having faked his death to escape Batman, who is far more capable of nabbing him than IRS agents or the police would ever be. With that said, it seems more likely he just wants the IRS off his back more than he wants to avoid a prison he could easily escape.
Even if Joker was to end up in prison, he could always fall back on his charisma. He was able to turn an Arkham psychiatrist into Harley Quinn, and throughout his career, he's always been good at forming gangs of criminals, so he can convert fellow inmates into his henchmen and partners. It's also likely he would be such a danger to himself and others that he would be placed away from the general population altogether.
While it's true that Joker doesn't want to end up in federal prison, and is willing to do some work to avoid it, he's most likely not terrified at the prospect. He's a clever psychopath who will use any means at his disposal to elude the authorities, after all. The insanity defense is just one of many tools in the Clown Prince of Crime's arsenal.