23 Jan How the IRS Tells the Difference Between Tax Fraud and Negligence
We all fear the IRS, especially when you start to wonder about things like these – how can the IRS see the difference between simple negligence and tax fraud?
Upon a closer look, you realize it’s hard to draw a line between the two. We are all honest citizens, but we do make mistakes, and it can quickly happen that we negligently file our taxes which, in the end, can look like trying to cheat your way out of paying taxes.
Think about it, who’s to say you’re not? You know you’re not, but to anyone around you, it might look like you are indeed trying to commit tax fraud!
Now, you might be afraid that even the IRS doesn’t see the difference, but it’s far from it. They know exactly how to spot the difference between the two.
Not Everyone Cheats
First of all, it’s important to note that the IRS is not actively searching for mistakes or attempts to break the law. In most cases, their auditors give you the benefit of the doubt, as they are well aware that most of us, don’t try to commit tax fraud.
In addition to that, the IRS knows which type of people are most likely to commit fraud, by looking at their profession. You might even be able to guess some of those yourself.
First, they know that most of those (at least 70%) doing the cheating so to say, are middle-income individual earners. Corporations mostly do the rest. Then, they know that tax frauds are mostly committed in cash-intensive businesses and by service industry people.
The IRS does surveys and research, so naturally, they know exactly which people are most likely to try and cheat them.
They know that the most likely people to commit fraud are self-employed restaurateurs, car dealers, clothing store owners, telemarketers, lawyers, doctors, and accountants.
So, as you can see, they have a clear picture of where exactly to look for fraud. That’s mostly why they don’t actively look for fraud.
Besides, the fact that the IRS knows who are the most likely offenders, their auditors are trained to look for tax fraud. Precisely because of that training, in most cases, they can easily tell the difference between tax fraud and simple, ordinary negligence.
Even though they can tell the difference between the two due to their training – by looking for the most common ways people make mistakes – they too can make a mistake.
In some sporadic cases, even the most trained IRS auditors come to the wrong conclusion, and an honest person gets to pay the price.
Thankfully, you can avoid this by being careful when doing your taxes, just in case. Additionally, you can always hire some professional help for this, or any other tax and IRS related matter. Contact us at Golden Tax Relief to find out more and get the help you need.