Being accused of a financial crime can be difficult, especially if the crime was unintentional. With regards to tax fraud, individuals could face criminal charges for failing to properly file for their taxes. Because not everyone uses an accountant, this means individuals file their own taxes. In these cases, mistakes can be made. However, only if the individual seeks to evade taxes or defraud the IRS will a tax fraud charge hold up.
Income tax fraud is when an individual willfully attempts to evade their tax obligations or willfully defrauds the IRS. Specifically, this crime occurs when a person or a company intentionally fails to file an income tax return, willfully fails to pay the taxes they owe, intentionally fails to report all income he or she receives, makes fraudulent or false claims on a tax return or prepares and files a false return.
Because not everyone fully understands the tax code or tax laws, could some instances be considered negligence versus income tax fraud? The IRS can usually distinguish between willful acts and when an honest mistake or error is made. However, certain details make is clear or at least suspicious that tax fraud occurred. This includes acts such as the overstatement of deductions and exemptions, falsification of documents, concealment or transfer of income, keeping two sets of financial ledgers, falsifying personal expenses as business expenses, using a false Social Security number, claiming an exemption for a nonexistent dependent and willfully underreporting income.
Being accused of income tax fraud can be an overwhelming experience, especially if you believe it was due to an error made. If you believe that you were wrongfully charged, it is important to understand your legal defense options. This will not only help to clear your name but also avoid harsh penalties.
Source: Findlaw.com, "Income Tax: Fraud vs. Negligence," accessed Oct. 1, 2017