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The IRS sometimes mistakes negligence for fraud

Like people all over the country, many Missouri residents don't understand the U.S. Tax Code, and that was before all of the changes that came about through the Tax Cuts and Jobs Act. With the extensive changes the act covers, even more people are confused.

If you are among these individuals, the IRS may have contacted you accusing you of criminal conduct in reference to your tax filings. What you attribute to negligence and an honest mistake, the agency calls fraud.

Negligence doesn't equal fraud

The primary difference between negligence and fraud is intent. Understanding the difference involves understanding what elevates an action to fraud:

  • Did you make false or fraudulent claims?
  • Did you intentionally fail to file your return?
  • Did you prepare and file a false return?
  • Did you intentionally fail to pay taxes legally owed?
  • Did you fail to report all of your income for the relevant tax year?

While you still may owe taxes, penalties and interest if your actions resulted from negligence, at least you will not face criminal penalties for fraud if you can prove you did not intentionally attempt to defraud the IRS. The simple fact is that people make mistakes on their tax returns. Even though the IRS may have experience identifying the difference between negligence and fraud, the agency makes mistakes as well.

Don't take allegations of fraud lightly

You may know that you did not set out to commit fraud when it comes to filing your taxes, but the IRS may see it differently. Ignoring communications from the agency could be costly -- not only to your finances but to your freedom as well. The potential fines can reach into the hundreds of thousands of dollars, and a conviction for tax fraud could result in prison time. Your freedom and bank accounts are not the only thing at stake, however.

A tax fraud conviction could adversely affect your personal and professional lives. Having a felony on your record could prevent you from obtaining employment, housing and more. Even if you already understand this, you probably shouldn't attempt to deal with the situation alone. Moreover, a criminal defense attorney may not have the appropriate knowledge to help you achieve the best outcome possible. You may fare better discussing your situation with a tax attorney who understands this area of law.

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