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The difference between tax fraud and negligence

On Behalf of | Dec 11, 2018 | Federal Crimes

According to the IRS, about 17 percent of taxpayers don’t follow the tax code in a given year. However, less than 1 percent of taxpayers are convicted of tax fraud or other tax code violations annually. This is because not all violations of the tax code are the same. To rise to the level of fraud, a taxpayer in New York or elsewhere must willfully ignore or violate some portion of the tax code.

This may include failing to file a tax return or making false statements on a return. Those who fail to report income or pay taxes owed could be committing a serious offense as well. In most cases, the IRS will assume that a mistake occurred because of carelessness as opposed to a blatant attempt to violate the law. When auditing a return, the government can generally spot signs of fraud such as using a false social security number or keeping multiple sets of books.

Individuals who are self-employed and run cash businesses are more likely to commit fraud according to IRS research. Furthermore, service workers such as doctors, lawyers and car dealers are also more likely to commit fraud than others. Roughly 75 percent of tax fraud cases involve individual filers as opposed to corporations. Even if a violation is considered negligence instead of fraud, a taxpayer could face a 20 percent penalty on the unpaid balance.

If an individual is charged with a crime such as tax evasion or fraud, it may be necessary to hire a criminal defense attorney. An attorney may be able to have evidence suppressed or cast doubt on evidence introduced in a case. This may result in a favorable plea bargain or a full acquittal that allows a person to avoid any financial or criminal penalties.