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Is it illegal to make tax mistakes?

On Behalf of | Jan 25, 2023 | Criminal Defense

Tax mistakes happen. If you do your taxes on your own, it is very possible you could make some errors. Some of them may be minor and may never be detected. But others could be very significant, perhaps drastically impacting how much money you had to pay to the government.

Everyone knows that the IRS takes tax fraud quite seriously, so people are often very worried that these tax mistakes are going to lead to criminal investigations. They believe they will be accused of trying to defraud the government out of taxes and that they could spend time in jail, pay hefty fines and the like. But is that actually going to happen?

The role of intent

The big question that the IRS is going to ask is whether or not you intended to provide inaccurate information. If it was an honest error, even if the fines do apply, you have not committed a criminal act. But if you had intent to do it for your own financial gain, then it could be considered tax fraud and it may be a criminal event.

For instance, perhaps you have been investing in cryptocurrency. These accounts are often separate from other financial accounts, and you may merely have forgotten that this one existed. But purposely omitting the value of that financial account so that you don’t have to pay taxes on it could be illegal. It all depends how it happened and if you did it on purpose.

Of course, this can make a potential case complicated. What if the government believes you did it intentionally and you know that you made an honest mistake? It’s important to understand your legal options.