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Is it income tax fraud or negligence?

On Behalf of | Jun 2, 2020 | White Collar Crimes

When it comes to the IRS tax code, there’s no denying the fact that it’s complex. And for that reason, the IRS realizes that people can and will make mistakes on their tax returns.

However, the IRS also draws a line between fraud and negligence.

Income tax fraud comes into play if you make a willful attempt to defraud the IRS or evade paying your taxes. Here are some examples:

  • Preparing and filing a falsified tax return
  • Intentionally failing to file an income tax return
  • Intentionally hiding income from the IRS
  • Making false or fraudulent claims

When it comes to fraud, the word “intentionally” is the one to pay attention to. With this, you knowingly took action to avoid paying taxes or benefit in some other way.

On the other hand, negligence also comes in many forms. Here are some examples:

  • A math error
  • Entering the wrong number in the wrong place
  • Claiming a deduction or tax credit you don’t qualify for


If you make a mistake, it won’t result in criminal charges. Instead, if the IRS finds the mistake, they’ll inform you of it and provide information on what to do next. Depending on the type of error, it could result in you owing more money.

The IRS is on the lookout for fraud

The IRS has skilled workers who are tasked with the responsibility of uncovering fraudulent tax returns. They know what to look for and how to investigate further, often looking for things such as:

  • Using someone else’s Social Security number
  • Keeping two sets of books
  • Falsifying documents
  • Hiding income
  • Claiming a child who doesn’t qualify as a dependent

Just because the IRS finds that you’ve done one of these things doesn’t mean it will lead to criminal charges. However, it gives them a reason to dig around to determine how deep the problem goes.

For example, you may have filed with the wrong Social Security number as an honest mistake. The rest of your return is 100% accurate.

Should you receive any type of notice, especially one associated with tax fraud, it’s important to read it from start to finish. Once you understand what’s to come, you can take the steps necessary to protect your legal rights.