Tax fraud is a serious crime, but what if you make an honest mistake on your taxes? Don’t worry. The IRS realizes that the tax code can be difficult for the typical person to understand. Auditors are trained to separate tax errors between two categories: tax fraud and tax negligence. While the former of these can result in hefty fines and/or time in prison, the latter of these is not a crime.

Tax Fraud

In order to commit tax fraud, a person must intend to do so. Tax fraud can take many forms, such as failing to file a tax return, underreporting one’s income, or filing a false return. Penalties for include up to five years in prison and/or up to $250,000 in fines. To learn more, visit our brief guide to tax fraud charges.  

Tax Negligence

It is estimated by the IRS that about one sixth of taxpayers fail in some way to comply with the tax code, but there are nowhere near that many fraud convictions every year. IRS auditors are trained to look for suspicious and fraudulent activity, but if there is no indication of an intent to defraud, they will generally treat an error as an honest mistake attributable to negligence. The taxpayer can still be fined a penalty of 20% of the underpayment, but he or she is not likely to be charged with tax fraud.

You don’t need to make yourself sick worrying about when the IRS is coming after you for that unintentional tax error, but if you need a tax evasion lawyer in Newark, you can trust our experienced team to take care of you. Contact the Law Offices of Robert J. DeGroot today to discuss your case.