We all make mistakes. Most of the time it is because we overlooked something, missed it or forgot to do a step. Regardless of the reason, mistakes are not always an excuse for some actions. Unless it is a common or minor error, mistakes made on taxes could fall under the category of tax fraud. However, this is also the case when someone purposefully acts or attempts to make it look like a simple mistake. Such a situation could land a person is some hot water, as these tax crimes could result in serious criminal penalties.
What is tax evasion? This occurs when an individual or a company purposefully underpays their taxes. The IRS realizes that the tax code is complicated and mistakes can occur. However, the IRS understands what mistakes could be made and what it looks like when an individual deliberately intended to underpay their taxes.
Here are a few examples of tax fraud. Tis criminal act occurs when a person fails to file his or her taxes. It also occurs when a person underreports his or her income. This is common practice by those working as wait staff, hairdressers and retail storeowners. Additionally, tax fraud could occur when businesses inflate their expenses or when families inflate the size of their household.
Those accused of tax evasion should understand that they have defense options. This means that they could provide evidence to prove that they did not intend to make these mistakes or underpay their taxes. Initiating a criminal defense could help an individual avoid criminal consequences such as fines and jail time. It could also reduce a fraud charge to a negligence charge, resulting in lesser penalties.