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What is the difference between tax fraud and tax negligence, and why does it matter?

For readers who do their own taxes, chances are most have made a mistake at some point that required correction. For some, the correction may have been made automatically by the IRS, while others may have gotten a call to clear things up.

Those who have made significant mistakes may have been subjected to a full audit in which the IRS scrutinized all the taxpayer’s accounts and financial information to ensure everything was reported correctly. Anybody who has been through an IRS audit knows it can be nerve-wracking. 

Often, when the IRS conducts an audit and finds discrepancies, the taxpayer simply made a mistake that needs to be corrected. Some mistakes are simple and result in minor discrepancies, while others are significant and have a major impact on the final outcome of the tax return. In such cases, the IRS is more likely to conduct an audit and perhaps assume the taxpayer was up to no good.

One important issue that comes into play when addressing discrepancies in an IRS audit is the difference between tax negligence and tax fraud. Negligence refers to situations where the taxpayer made a careless mistake, while fraud involves intentional efforts to deceive the IRS. Different standards of proof apply to negligence and fraud, and different penalties apply as well. It is important for taxpayers being scrutinized by the IRS to work with an experienced attorney to make sure they have representation navigating the audit process and minimizing the consequences of the investigation.

In our next post, we’ll look further at how the IRS distinguishes negligence from fraud and how an experienced attorney can provide advocacy for taxpayers under IRS scrutiny. 

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The Peck Group, LC

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Located in Atlanta, The Peck Group, LC, represents clients nationwide. Regionally, we are committed to serving clients in Fulton County and throughout the state of Georgia.