Tax fraud vs. tax negligence: What’s the difference?

On Behalf of | Apr 7, 2017 | Firm News, White Collar Crimes

In our last post, we talked about tax fraud and how the legal consequences associated with such a crime often are only part of the total punishment. On a personal level, someone charged or convicted of tax fraud can suffer immensely. On a professional level, an individual’s credibility can forever be tarnished. Tax fraud is an incredibly serious offense, and anyone accused of this crime needs to consult with an attorney as soon as possible to defend their case and uphold their rights.

But what constitutes tax fraud? Tax fraud is an intentional act. You would have to intentionally not file your tax return; or intentionally misrepresent your income or conceal a source of income; or intentionally fail to pay the Internal Revenue Service what they are owed; or if you make claims that are false. All of these circumstances constitute tax fraud.

What some people think, though, is that any mistake could trigger action by the IRS. This is not true. There are honest mistakes that taxpayers make that are either labeled as “tax negligence” or simply don’t even rise to the level that would require action by the IRS. These are things such as honest math mistakes or incorrectly filing out deductions. The IRS knows the tax code and tax rules are complicated. Simple mistakes like this are usually forgiven or corrected for you. Even if tax negligence is alleged, this charge usually only results in a fine.

Source: FindLaw, “Income Tax: Fraud vs. Negligence,” Accessed April 7, 2017