What is the Difference Between Tax Fraud and Negligence?

What is the Difference Between Tax Fraud and Negligence?

Your Tax Questions, Answered

Video Transcript:

I’m Alyssa Maloof Whatley. I’m an Atlanta-based tax and bankruptcy attorney. And we’re going to talk about what is the difference between tax fraud and negligence.

What is Tax Negligence?

So, let’s start with negligence. And the easiest way to think about this is it seems careless, a mistake, it’s unintentional. So, a good example of this would be maybe you’re doing your Schedule C if you have a business and you’re typing in miles, maybe you accidentally type in two zeros instead of one zero, right? Or maybe you type in three zeros instead of two zeros. Those can be seen as maybe a mistake, right? It wasn’t intentional, you were going too fast and maybe you typed in something wrong. That is a good example of something that’s negligent.

What is Tax Fraud?

So, what is tax fraud? Tax fraud is something that is deliberate. It seems intentional. It’s willful. They’re going to ask a lot of questions. How did this number end up on the return? What basis did you use to come up with the number? And the more things that you have that are likely to indicate that maybe it was a mistake, it was unintentional is more likely going to lean towards negligence and the less information you have the more likely it seems made up, the more likely it seems like you knew what you were doing, the more likely that that’s going to seem more like fraud.

What is Tax Evasion?

Tax evasion generally comes into play when someone is not filing their tax returns. So, most people do not understand that failure to file a return is actually a crime. Not filing is a crime. It’s an easily rectifiable crime by filing your missing returns and being compliant. But that’s how most people get in trouble for tax evasion is a long history of unfiled returns. And it generally is people that are more in the public eye, people that have large influence because the IRS does like to make examples out of those individuals.

What is Tax Avoidance?

Tax avoidance sometimes could be described as maybe paying less than you owe by taking certain aggressive tax positions. So, you might be filing, but you’re doing things to avoid paying taxes that may or may not be legal or maybe extreme positions.

So, if you find yourself dealing with any of these issues or having questions about tax negligence, tax fraud, tax evasion, or tax avoidance, we’re here to help. And we actually offer free consultations. You can book by giving us a call at 404-551-5838, or you can book online at www.atltaxlawyers.com.


Alyssa Maloof Whaltey

My goal is to make the tax resolution process as easy and stress free as possible so you can get back to focusing on the things that bring you joy.


What Do I Do If I Receive an Information Document Request (IDR) from the IRS?

If you get any notice from the IRS, pay attention. You might be nervous, or you might not know what the IRS letter means. ...

An IRS Double Standard: Backdating Docs While Demanding Perfection from Taxpayers

The Internal Revenue Service (IRS) was recently caught backdating approval documents in taxpayer penalty assessments. This shocking revelation, reported by outlets such as The ...