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Income tax fraud and tax mistakes: Are they the same thing?

There is nothing simple about Internal Revenue Service (IRS) tax codes. Even the most experienced tax professionals run into challenges, especially with rules and regulations changing so often.

It's your responsibility to ensure that you pay the proper amount of federal, state and local taxes. If you don't, you could find yourself in trouble with the law, while also owing additional money in penalties and interest.

What does income tax fraud look like?

Income tax fraud is defined as an attempt to defraud the IRS or evade tax law, such as by doing one of the following:

  • Preparing and filing a false income tax return
  • Making fraudulent claims to lower your taxable income
  • Intentionally failing to report earned income
  • Intentionally failing to file an income tax return

If you do one of these things, such as hiding income in offshore accounts, it could result in a tax fraud charge.

However, there is a big difference between tax fraud and a tax mistake. The IRS knows that people will make mistakes on their tax returns. They also know that this is not typically intentional. Examples of a mistake include:

  • Errors regarding addition and subtraction
  • Claiming a deduction or credit that you don't qualify for
  • Filing status error

A charge of income tax fraud is a big deal, as a conviction can result in serious penalties such as large fines and prison time.

Conversely, a mistake can cost you money, but it won't result in a criminal charge.

If you're charged with income tax fraud, learn more about your legal rights and the best way to defend yourself.

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