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Former Assistant U.S. Attorney

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

On Behalf of | Apr 3, 2020 | Federal Crimes

No matter how diligent you are when filing your taxes, it’s normal to worry about making a mistake. What if you accidentally entered 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:

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

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

What are the penalties for tax fraud?

Being convicted of tax fraud can result in significant civil or criminal punishments. The type of penalty you’d face would depend on the individual circumstances of the case.

A few common types of tax fraud include attempting to evade taxes, such as by hiding assets or putting money in foreign accounts, deliberately underreporting your income or providing false statements. These types of crimes could result in thousands of dollars in fines and multiple years in jail.

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 when someone intentionally tries to avoid paying their full tax obligation.