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Is it tax fraud or a mistake?

Each year, everyone must file income taxes with the Internal Revenue Service. Tax codes are complex, and may cause some Georgians to question whether their taxes are correct. Individuals are responsible for approximately 75 percent of the country’s tax fraud.

Tax fraud can result in felony charges, steep fines and jail time. Everyone should understand what the government considers tax fraud to clearly distinguish an honest mistake from a criminal offense. What constitutes tax fraud?

Knowingly evading taxes

Tax fraud must be a willful act to not pay or to underpay owed income taxes. This can include actions such as:

  • Underreporting earned income
  • Reporting false dependents
  • Misrepresenting your identity or financial information
  • Hiding assets
  • Failing to submit tax documents
  • Tampering with tax documents

Many times, individuals underreport income earned in cash. This is much more difficult for both the earner and the government to track. However, you are expected to accurately report all incomes, whether earned in cash or through a negotiated income.

Honest mistakes

While mistakes are not considered tax fraud, they can still result in financial repercussions, including a 20 percent penalty of the underpaid amount.

Business owners must be especially careful when filing taxes. Personal expenses should never be recorded as a business expense or vice versa. Your business’s tax forms may be even more complex than your personal income taxes. If you are uncertain how to proceed, consider hiring a tax accountant to help you navigate the filing process.

Tax fraud is a very serious crime. If you are suspected of tax fraud, consider speaking with an experienced attorney for assistance.

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