How The IRS Distinguishes Between Tax Fraud And Tax Negligence


According to the Internal Revenue Service, approximately 17 percent of all American taxpayers are guilty of some degree of tax fraud. Also according to the IRS, and perhaps somewhat surprisingly, 75 percent of those tax cheaters are individuals, not businesses.

How Do People Commit Tax Fraud?

It’s important to realize that there are two different types of tax fraud: that which is committed intentionally so as to reduce the amount of taxes paid by an individual, and that which is committed unknowingly, usually via an accounting or mathematical mistake.

As an experienced tax fraud lawyer in Newark, the Law Offices of Robert J. DeGroot has success defending all types of cases involving the Internal Revenue Service.

The IRS has teams of trained investigators whose sole purpose is to look for the warning signs of tax fraud and subject those individuals to a tax audit. Many businesses and individuals live in fear of the IRS tax audit, as they assume it’s a witch hunt to ruin them financially and legally, but this isn’t always the case. What happens to you during an audit largely depends on whether or not the auditor determines that the suspicious tax return was filed fraudulently or negligently.

Examples Of Tax Fraud

Skilled auditors are constantly on the lookout for documentation or behavior that indicates something underhanded is going on. These indicators include:

  • False Social Security Numbers
  • Multiple Sets Of Financial Records
  • Claiming Defendants Who Don’t Exist
  • Deliberately Underreporting Income
  • Hiding Income In Offshore Bank Accounts
  • Filing A Tax Return On Behalf Of A Non-Citizen

If any of these red flags appear in the financial records or tax filings, it may be enough to trigger a closer look by the IRS. First, they’ll request additional documentation to support the claims you’ve made on your tax return (or lack thereof). If that still doesn’t satisfy them, they’ll show up at your home or place of business to take things a step further.

What Happens If An Auditor Suspects Tax Fraud?

People live in fear of the IRS audit, but in fact the audit is far less painful than what can potentially come after it. If an auditor suspects an individual of tax fraud, they have the choice to file criminal charges, civil charges, or both, against the alleged offender.

If you’ve found yourself in this situation, it’s imperative that you seek the services of a tax fraud lawyer in Newark right away. The Law Offices of Robert J. DeGroot will be able to help you assess exactly the type of charges that have been filed, how much the government will have to prove to levy a successful case against you, and what exact level of evidence you’ll need to supply to avoid a conviction. If your charges are the result of negligence, and not fraudulent, it may be possible to avoid the fines and potential prison time that is sometimes associated with tax fraud.

For more information, contact the Law Offices of Robert J. DeGroot for a confidential consultation today. We fight to protect the interests, financial and otherwise, of our clients and pride ourselves on being personally invested in each and every tax fraud case we take on.