It may seem like a trivial distinction, but tax fraud and tax negligence are actually two different acts that a taxpayer may perform when they fill out their taxes. These two distinct charges lead to different penalties, and they are defined differently, even if those differences are oh so slight.
The first thing to realize about these two infractions is that the Internal Revenue Service understand, on some level, that people can easily become confused by the tax code and the tax laws that apply to them. Filing taxes is an intimidating task because of the complex guidelines and laws that are in place. So when you make a mistake, the IRS will actually correct it for you so long as it is a simple math error.
But when the mistakes are too great, that is when negligence and fraud come into the picture. Negligence is the lesser of the two charges. A taxpayer is negligent when he or she overstates their deductions, falsifies documents, uses an exemption they don’t qualify for, underreports income or generally is careless with their tax filing.
Tax fraud can also be alleged under these same careless acts. However, it is the willful intent of the taxpayer that leads to the more serious charge. Also, if you simply don’t file taxes or intentionally don’t pay what you owe the IRS, it is likely that tax fraud charges will follow shortly thereafter.
Whether you are accused of tax fraud or tax negligence, you should consult with an experienced tax attorney to make sure you are proceeding appropriately.