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The fine line between mistakes and fraud on tax returns

| Dec 20, 2016 | Criminal Tax Violations |

Most Minnesota residents have probably heard about people being charged with tax fraud. If convicted, defendants may experience serious penalties for these offenses. But, just what constitutes fraud when it comes to income taxes? Does the Internal Revenue Service take into account that tax code and procedures are very complicated and can be easily mistaken by taxpayers?

The short answer to that last question is yes however it is important to know that there may be very fine lines between what is considered fraud and what is considered an innocent mistake in the eyes of the IRS. According to Forbes, one of the ways that the IRS differentiates these two is the intent of the taxpayer. If a person is believed to have willfully and consciously ommitted or altered information on a tax return, for example, that is more likely to lead to a charge of fraud than if a person clearly made a mathematical error in calculation.

That said, even adding or subtracting incorrectly may not always be seen as an error by the IRS. GoBanking Rates suggests that if the Internal Revenue Service sees a pattern of such calculation errors by the same taxpayer, the concern about potential fraud becomes much greater than a one-time error.

Patterns become important with other types of mistakes as well. These include putting data in the wrong place on a tax return, using the wrong type of tax return form or failing to list and report income even if no taxes are ultimately required to be paid on the money.