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Tax fraud, tax negligence and the possible consequences

It's tax season, and with only two weeks until the dreaded Tax Day is upon us, it is time to discuss two different tax offenses that often get confused for one another. Tax negligence and tax fraud are two terms that get thrown around when the month of April rolls around. So what's the difference between the two and what do you need to know about these particular cases?

The first thing to know is that a very small portion of tax filings end up being investigated and ultimately yield charges of tax negligence or tax fraud. The IRS estimates that only about .0022 percent of tax filings result in criminal charges. Tax fraud is the more serious of the two offenses.

Tax fraud is the willful attempt to evade tax laws and the IRS. There are a number of different actions and behaviors that can lead to this charge, such as:

  • Not filing a tax return on purpose
  • Purposely failing to pay the IRS what you owe
  • Makes inaccurate or incorrect statements on purpose
  • Files a false return
  • Conceals income from other sources

These can culminate in a tax fraud charge with serious personal, financial and criminal consequences.

Tax negligence, on the other hand, is an error that is made by the individual taxpayer but one that wasn't done on purpose or with nefarious intent. The IRS will usually forgive these errors, but you may still face a serious fine for the mistake.

Source: FindLaw, "Income Tax: Fraud vs. Negligence," Accessed April 5, 2017

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