McKellar & Easter, Attorneys at Law We protect what's most important
Contact Us For A Free Telephone Consultation 865-566-0125 877-482-9767

What's the difference between income tax negligence and fraud? -- II

A few weeks ago, our blog started discussing how the Internal Revenue Service typically views the majority of tax return oversights as being the product of careless errors -- provided no signs of willful evasion are present.

To that end, we also explored some types of conduct that typically serve as red flags for auditors, signaling that a mistake was potentially not quite so honest. We'll continue this discussion in today's post, examining how the IRS defines income tax fraud and the possible penalties for this conduct.

Fraud

When a taxpayer commits income tax fraud, he or she is willfully attempting to evade their responsibilities under the tax code and/or defraud the federal government.

As to what types of conduct constitutes income tax fraud, consider the following:

  • Purposely neglecting to pay taxes owed
  • Willfully failing to file a tax return
  • Intentionally submitting false/fraudulent claims
  • Deliberately omitting certain income  
  • Knowingly preparing and filing a fraudulent return

While unintentional errors on an income tax return can cost the filer a penalty of as much as 20 percent of the underpayment, the punishment meted out for income tax fraud is decidedly more draconian.

  • Attempts to evade or defeat the payment of taxes: If convicted of this felony, federal law dictates that the offender could face up to five years in prison and/or a fine of up to $100,000.
  • Willful failure to supply information, file a return or pay required taxes: If convicted of this misdemeanor, federal law dictates that the offender could face up to one year in prison and/or a fine of up to $25,000.
  • Submission of false statements or fraud: If convicted of this felony, federal law dictates that the offender could face up to three years in prison and/or a fine of up to $100,000.

Given the severity of these penalties, it's clear that those people who are the subject of an IRS investigation or have already been charged with tax fraud to consider speaking with a skilled legal professional as soon as possible.

No Comments

Leave a comment
Comment Information

Experienced. Committed. Respected.

Mr. McKellar was voted by his peers as a “Top Attorney” by Knoxville’s CityView magazine in its 2010, 2011, 2012, 2013, 2014, and 2015 editions. In 2014, 2015, and 2016, Mr. McKellar was selected as a member of the “Top 100 Trial Lawyers” by the National Trial Lawyers.

Ms. Easter was voted by her peers as a “Top Attorney” in Cityview Magazine for Family Law / Divorce / Child Support in 2012, 2013, 2014, 2015 and 2016.

  • The National Trial Lawyers | Top 100 Trial Lawyers
  • The National Trial Lawyers | Top 100 Trial Lawyers
  • Your Partner in Practice | KBA Proud member | Knoxville Bar Association
  • Avvo Rating 10.0 Superb
Start Now. Contact Us Today.

Have Questions? We Have Answers.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Office Locations

Knoxville Office
625 Market Street, 7th Floor
Knoxville, TN 37902

Toll Free: 877-482-9767
Phone: 865-566-0125
Fax: 865-566-0126
Map & Directions

Nashville Office
424 Church Street, Suite 2000
Nashville, TN 37219

Map & Directions

Atlanta Office
Riverwood Center
3350 Riverwood Parkway, Suite 1900
Atlanta, GA 30339

Map & Directions