Every year, you must file your taxes. There are few things more confusing than the American revenue system. Thousands of regulations exist, and it is unrealistic to think no one will make mistakes.
Working the system to your advantage to pay the minimum amount possible is not a crime. Lying about income or assets on your filings is fraud. Or is it evasion? Contrary to popular belief, there is a difference between tax fraud and evasion.
What is civil tax fraud?
Tax fraud is a civil offense that involves the improper submission of taxes. These cases are often related to negligence. Knowingly having a problem with your paperwork and failing to fix it could result in a civil case. One deceptive element in an otherwise clean filing is enough for the Internal Revenue Service to press charges.
According to the IRS, there must be clear and convincing evidence to support a civil fraud case. Cases can be against organizations or individuals. Jail time is not on the table in a civil case, but hefty penalties or fines are possible.
What is criminal tax evasion?
In the pursuit of saving a few bucks, some people will resort to nefarious means. Tax evasion, or criminal tax fraud, is severe and can result in jail time. These cases range from hiding income to threatening an accountant to cook the books.
Making a mistake on your taxes may not result in punishment unless that error was purposeful. Always consult an attorney for clarification on United States tax laws.