The government takes taxes very seriously and the IRS can rigorously check records while running an audit. If they find that you have paid the wrong amount, they may try to determine if this is fraud or if you just made a mistake.
For many business owners and independent filers, this is a major concern. You don’t want to make a simple paperwork mistake and then find yourself facing felony fraud charges. It can make doing your taxes very stressful, even when you’re trying to do them correctly. So what is the difference between a simple mistake and an act of fraud?
The role of intent
The difference is intent or a willful vs. a non-willful act. What were you trying to do when you allegedly paid the wrong amount in taxes? Did you take this step on purpose, or were you merely negligent?
The problem is that it can be very difficult for the authorities to determine what happened. Say you made $100,000 on a specific project and only reported $10,000. Did you choose to leave off $90,000 so that it would go untaxed, or did you merely forget a zero as you tried to enter the information correctly? The authorities may argue that you must have intended to do it with such a large amount, but you may maintain that you just absentmindedly forgot a digit.
If you do find yourself in this position, you absolutely need to know what legal options you have. Take this as seriously as the government does, no matter what happened, and focus on the steps you must take moving forward.