When is making a tax mistake a crime?

On Behalf of | Jul 2, 2019 | Firm News |

Probably no one enjoys paying taxes. Still, by every April 15th, many residents of the United States must tell the federal government how much they owe in taxes. As you likely know, the U.S. tax code is unbelievably complex. If you are not a tax expert, making a mistake may be less difficult than you may think. 

Tax evasion is not exactly uncommon. In fact, according to some estimates, for every 30 individuals and businesses that pay their taxes, one person or company does not. While tax evasion may land you in jail, other mistakes may also carry significant legal penalties. When is making a tax mistake a crime, though? 

Negligence versus fraud 

For criminal culpability in the United States, you must know your actions are wrong. Negligence is something altogether different. With negligence, you simply do not exercise care. When it comes to your taxes, therefore, you must think about your actions. Simply deducting more than the law allows is probably negligent behavior. Hiding income, filing false returns or lying to IRS agents, though, may constitute fraud or another crime. 


Often, an effective way to determine if a tax mistake has legal consequence is to think about cheating. While there is nothing wrong with using the tax code to minimize your tax liability or maximize your refund, you do not want to cross over into cheating territory. Said differently, if you cannot find some provision of the tax code to back up your approach, you may be either inadvertently or intentionally defrauding the U.S. government. 

With a bit of care, you may never have to worry about facing prosecution for a tax crime. Still, as the saying goes, you are better off safe than sorry. By understanding when tax mistakes become a crime, you can better plan for staying out of legal hot water.