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Tax mistakes are different than criminal activity 

On Behalf of | Sep 17, 2023 | Felonies

It is important not to make mistakes when doing your taxes. This is especially true if you are a business owner and the taxes are more complex. But it is also true for individuals who are filing themselves.

However, many people worry that tax mistakes are going to have dire ramifications. They’re concerned that they will be sentenced to jail, for example, or that they will have to pay fines. They worry about having to go through a criminal trial and the damage even that can do to their reputation, regardless of the outcome of the trial. Are these concerns valid?

Only if it is intentional

It is possible to face criminal charges for underpaying on your taxes, but the key is that it has to be something that you did “knowingly and willingly”. In other words, there has to be intent. You knew that you were underreporting your income or committing other paperwork errors to pay less to the government.

This is much different than simply filling in the paperwork incorrectly, making a mathematical error, missing a page in the documents or something of this nature. An honest mistake may still need to be rectified in the future. The IRS does want to get paid the correct amount of money. 

But there is a vast difference between criminal activity and accidentally underpaying on your taxes. The IRS very rarely tries to pursue criminal action, and when they do, it is for those who have paid the wrong amount intentionally.

Of course, you could find yourself in a complicated situation where you’re accused of intentional tax fraud but you believe that you just made an honest mistake. It’s very important to understand all of the legal options you have in a situation like this.