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Are tax return mistakes the same as tax evasion?

You received a notice in the mail that the Internal Revenue Service (IRS) found errors in a past year's return. Now, they want to perform an audit. You're worried you could be accused of a crime like tax evasion if your returns come back inaccurate.

Are mistakes considered to be tax fraud? I made errors on my tax return because I didn't understand the tax code.

Tax evasion is intentional, and it comes in all shapes and sizes. For example, a large corporation that uses offshore accounts to hide assets might end up charged with tax evasion. Or, a mother who refuses to file taxes each year to save money could find herself charged with tax evasion. Hairdressers and waitresses who are paid in tips might underreport their income. Businesses could also overinflate their expenses, so they get more of a reduction on their taxes.

No, mistakes aren't tax fraud. You might even be able to show how you made those mistakes, making it easier for the IRS to make changes to prevent the same kind of errors again. Tax forms are complicated, and the IRS doesn't think everyone is going to get them right every time. If you make a mistake where you underpay your taxes and the IRS asks you to pay the difference, it's a good idea to do so and move on unless you feel they've made an error. If the IRS accuses you of tax evasion, then you may need to speak with your attorney about defending yourself, because you could face criminal charges.

Source: FindLaw, "Tax Evasion," accessed March 31, 2017

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