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September 20, 2022


How small issues can create big problems for taxpayers

The U.S. tax code is among this country’s most complicated and dense bodies of law. And every year, individuals must file their tax returns in compliance with these laws. Unsurprisingly, people make mistakes, miscalculations, and missteps that result in inaccurate returns and payments.

Even when these issues seem small, they can create a few big problems for taxpayers.

They can trigger audits

While some audits are random, others happen because the IRS has detected suspicious activity. In either case, an audit can be highly stressful and disruptive. Parties must prepare documentation and may need to attend interviews and interact with federal agents.

Generally, the more serious an issue is, the more invasive the audit process can be.

  • A small error or miscalculation can often be managed through mailed correspondence.
  • Audits stemming from questions about missing income or questionable deductions can require taxpayers to attend an office examination at a local IRS branch.
  • The most extensive audits are field audits, where an IRS agent visits a person’s home or business to scrutinize financial records.

Whatever an audit entails, the process can be nerve-wracking and inconvenient.

The situation can spiral out of control

What might start as an isolated mistake or a one-time risk someone takes can quickly spiral out of control. Over time, a person might break laws to cover up misconduct or take increasingly bigger risks.

In these situations, people may act out of fear or desperation rather than a desire to commit fraud or evade taxes. Often, they feel embarrassed or ashamed of their situations, so they don’t reach out for help until the issue has gotten much worse.

It affects more than taxes

Tax violations can have financial, personal, professional, and legal repercussions.

For instance, they can cost someone their job and make it difficult to get a new one. This is particularly true for individuals working in financial or government roles.

Violations can also trigger fines, penalties, and legal fees. 

Further, if a person winds up with a criminal conviction, incarceration and other penalties can strain personal relationships and damage a person’s record and reputation.

Important takeaway

The crucial thing readers can take away from this information is that every tax-related issue – big or small – warrants serious and swift attention. Tackling tax controversies quickly and effectively can protect individuals’ rights and future.

Tax Evasion