August 6, 2020
Avoiding allegations of criminal tax fraud
As the saying goes, “to err is human.” This statement applies to a variety of situations, including preparing taxes. Every year, taxpayers here in Texas and across the country make mistakes that could put them under suspicion by the IRS for criminal tax fraud. The best way to avoid such allegations is to avoid making mistakes in the first place.
The most common reasons people could face allegations of tax fraud include failing to report all their income, failing to file tax returns, overestimating items such as business expenses and charitable donations, and inflating other deductions. A primary reason for these oversights and/or mistakes is the failure to keep good records. Doing so could go a long way toward making potentially costly mistakes.
Part of the problem is the Internal Revenue Code itself. Like people elsewhere in the country, Texas residents often have a problem understanding the rules. Of course, the best way to overcome this particular issue is to work with someone who does understand the applicable laws and regulations.
If a taxpayer does realize a mistake was made, the best course of action would be to handle the issue right away. The IRS will often work better with a taxpayer who comes forward before the agency discovers the error. The first step in correcting the problem is to gather all the relevant information in order to determine just how extensive the mistake is. Thereafter, filing an amended return may be the end of it. However, that is not always the case.
The IRS may accuse the taxpayer of criminal tax fraud and not accept an amended return. Under these circumstances, it could be disastrous to attempt to handle the problem alone. Instead, it would be worthwhile to consult with an experienced tax attorney in order to help achieve the best resolution possible to the situation.