If you find yourself accused of tax fraud of tax evasion, there is one simple question to ask: Did you intend to do it? What you’ll find is that the exact same outcome can have two very different sets of legal ramifications, all depending on what you meant to do.
For instance, perhaps you accidentally reported your income at 20% lower than it really was. You had not kept good track of your paperwork for the year and overlooked a major sale when you filed. The IRS may catch the mistake and inform you that you need to pay more in taxes. That’s not tax fraud.
However, maybe you wanted to get out of taxes because you neglected to save enough money during the year. As a result, you threw away the records of that sale and acted as if it did not happen. This led to the 20% reduction in earnings, which in turn led to you owing more in taxes. That is tax evasion.
The reason it works like this is that the IRS lists intent as one of the key elements behind evasion or fraud. Mistakes without intent are just that: Mistakes. While you still have to pay the additional money, a mistake should not lead to the same types of charges you will face if you intentionally commit fraud.
Of course, you can imagine how complicated that makes some of these cases. They may say you did it on purpose and push for fraud charges. You may say it was an honest mistake and offer to pay the additional money that you owed. When both sides do not agree, you need to know what legal options you have. An attorney can help you negotiate a positive outcome to your case.