Now that tax season is here, it is vital for you to understand the law as a taxpayer. If you intentionally underpay the IRS or fail to disclose your taxable assets, you may face an investigation for tax evasion. But what about mere mistakes or carelessness? Everyone can make errors on their taxes, right?
Generally speaking, a mistake without any intentional wrongdoing is not considered tax fraud by the IRS. But it is still possible for the IRS to investigate and potentially bring charges against you if you make significant errors regarding your taxes.
Tax evasion examples
Some common types of tax fraud include:
- Intentionally understating income
- Failing to submit tax returns
- Providing inadequate records during an audit
- Failing to make required payments
- Concealing taxable assets
- Dealing in cash transactions and neglecting to report them
- Inconsistent explanations of records
- Failing to cooperate with authorities
Again, a vital component of committing a tax crime is the intent. If you do not intentionally engage in fraudulent conduct, you may not be guilty of a crime.
Tax evasion defenses
If you face allegations or criminal proceedings for tax evasion, you may be able to defend yourself and prove your innocence. Two common defenses to tax fraud charges are:
- Lack of intent or knowledge: Claiming ignorance of what you need to report or when taxes are due. This is often due to forgetfulness, carelessness or negligence. However, claiming ignorance of the law is not always a valid defense.
- Inadequate evidence: To convict you for tax evasion, the prosecutor must have proof of intent and documents to demonstrate your fraudulent behavior. You may also be able to point out an inaccurate calculation of your taxes.
The exact way you defend yourself depends on the unique details of your situation.
Tax evasion convictions can result in hefty fines, imprisonment, probation and restitution.