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Is tax fraud and negliegence the same thing?

White collar crime allegations can seemingly come out of nowhere, but should always be taken seriously. Tax fraud is a good example because even a simple mistake made while filing taxes could be considered fraud in some cases. If you are wondering how such a thing could happen, you are not alone.

Tax time is typically a time of chaos for some. Understanding the tax code in New Jersey can be as challenging as the actual process of filing taxes. Mistakes can and do happen, but what constitutes simple negligence and what constitutes actual fraud?

First, no, tax fraud and negligence is not the same thing. Making a few mistakes on your taxes is usually categorized as negligence. While the Internal Revenue Service, or IRS, may penalize you for making mistakes on your taxes, you likely will not be punished by the law. Usually the IRS will impose a 20 percent penalty if you underpay your taxes.

Tax fraud is another matter entirely. If the IRS determines you have willfully engaged in fraudulent activities, you could be subject to criminal punishment including time in prison and costly fines. Here are some of the activities the government classifies as tax fraud:

-- Falsifying documents

-- Willfully underreporting income

-- Concealment of income

-- Lying about deductions

-- Using a fake social security number

Anytime the IRS determines you have engaged in tax fraud or even negligence, your first step should be acquiring legal representation. You need an attorney who can help you prove that you did not willfully falsify your tax documents. Unless you take action right away, you risk a criminal conviction and other serious consequences.

Source: FindLaw, "Income Tax: Fraud vs. Negligence," accessed March 21, 2016

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