People who have an earned income are expected to file income tax returns. These returns must contain factual information. While you typically won’t face any negative consequences because of accidental misstatements, you can face criminal charges if you intentionally provide false information. Approximately 75% of income tax fraud is committed by individuals.
Failing to provide accurate information for the purpose of not having as big of a tax liability or for any other reason can lead to tax fraud charges. Some people don’t file a tax return in an effort to not have to pay taxes. This is known as tax evasion. One factor to remember about these charges is that the actions behind them must have been intentional.
How is tax fraud determined?
The Internal Revenue Service has auditors who will review returns if there is something amiss about them. These individuals will try to determine whether there are signs of fraud. If there isn’t anything that points to fraud, they may attribute the issue to negligence instead of making a claim that the taxpayer committed tax fraud.
If the case is determined to be negligence instead of fraud, you may still be held liable for a penalty of 20% of the amount you underpaid in income taxes. In this case, you won’t face criminal charges.
Anyone who is accused of tax fraud or embezzlement will have to answer to those charges in court. Because these are serious charges, it’s best to work with an attorney who’s familiar with income tax laws. These cases are often very complex, so being able to determine what options you have for your defense must be done quickly, so you have time to properly prepare.