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Can an honest mistake on your tax return count as tax fraud?

On Behalf of | Apr 25, 2022 | White-collar crimes

No matter how diligent you are when filing your taxes, it’s normal to worry about making a mistake. What if you accidentally enter wrong information? Will you get a hefty fine – or worse, jail time?

The key difference between making an honest mistake and committing tax fraud is intent. Tax fraud occurs when you willfully falsify information on your tax return to lower your tax liability. You could be committing tax fraud if you intentionally:

  • Make false claims on your taxes
  • File a false return
  • Do not report all of your income

It’s important to bear in mind that tax fraud requires an element of deliberate deceit. Therefore, tax evasion alone does not qualify as tax fraud. However, attempting to evade taxes by hiding assets or placing money in foreign accounts could constitute tax fraud.

What are the penalties for tax fraud?

Being convicted of tax fraud can result in significant civil or criminal penalties. The severity of consequences would depend on the kind of tax fraud committed but would usually involve a combination of fines and jail time.

The Internal Revenue Service (IRS) typically assumes that tax errors without signs of fraud are accidental. However, the IRS may still fine you if you make an honest mistake. Nonetheless, these fines are far less severe than the penalties you’d face from a tax fraud conviction.

It’s important that you file your taxes in a timely and accurate manner. But if you make a mistake, remember that the IRS expects certain errors. The more serious issues arise if you’re suspected of intentionally trying to avoid paying your full tax obligation. In such cases, it’s important to seek the help of a criminal defense attorney who is experienced in handling white-collar crimes.