Was that tax mistake negligent or fraudulent?

Tax mistakes happen. When they’re just negligent, it’s often not a huge issue. You may still get a small fine and you may have to pay what you owe due to the error, but you did not commit a crime. The United States simply has citizens fill out their own taxes; the Internal Revenue Service (IRS) can’t possibly expect people with no training to be perfect.

That said, there is a big difference between negligence and fraudulent activity. Typically, that difference is intent. If you chose to fill out your taxes incorrectly on purpose, in an effort to pay less than you knew you owed, then you have possibly committed tax fraud. That’s when you may face criminal charges.

What does the IRS look for to see if fraud occurred? Some red flags include:

  • Creating false documents to use while filing.
  • Lying about exemptions or deductions to reduce what is owed.
  • Having two very different sets of financial documents.
  • Transferring income in an effort to conceal it.
  • Lying about your Social Security number or other important identifying information.
  • Listing some of your personal expenses and claiming that they are actually business expenses.
  • Reporting that you earned less during the year than you really did.
  • Using exemptions for children you do not have, or for other nonexistent dependents.

Are you facing accusations of criminal activity for something you believe was little more than an honest mistake? You and the IRS may not see eye-to-eye on this, and it can have a drastic impact on your life. Make sure you know all of the legal options that you have.


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