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Negligence vs Income Tax Fraud


While most people associate white collar crime with embezzlement or insider trading, in reality some of the most commonly charged offenses involve tax fraud. Unfortunately, it isn’t that difficult to commit tax fraud without even meaning to, which can lead to prosecution for a crime that the defendant didn’t even know he or she was committing. To help you navigate this complex area of the law, we’ve compiled a list of some of the biggest differences between tax fraud and negligence. However, this list is not exhaustive, so if you are concerned that you may have committed tax fraud, it is important to speak with an experienced white collar crime lawyer who can evaluate your case.

What Qualifies as Income Tax Fraud? 

Income tax fraud involves the purposeful attempt to defraud the IRS or otherwise evade tax law and can be committed by both individuals and companies. Some of the most common examples of tax fraud include:

  • Intentionally failing to file a tax return;
  • Purposely failing to pay tax debt;
  • Concealing, transferring, or failing to report income;
  • Overstating deductions and exemptions;
  • Falsifying documents;
  • Claiming personal expenses as business expenses;
  • Making a false claim; and
  • Filing false tax returns.

The line between tax fraud and mere negligence is very thin, which means that many innocent people are accused of fraudulent tax-related activity. Furthermore, even when an auditor or other tax official finds that a taxpayer was not attempting to defraud the government, but negligently made an error in paperwork, the IRS can still fine the individual a penalty of 20 percent of the amount that was underpaid.

The IRS has identified certain types of businesses or individuals that are most likely to commit tax fraud, namely those that could underreport cash income, such as:

  • Service workers paid in cash;
  • Self-employed taxpayers;
  • Restaurant owners;
  • Hairdressers;
  • Car dealers; and
  • Salespeople.

Because the IRS looks so closely at these industries, it is especially important for those who work in these positions to use great care when filing taxes. Failing to do so could result in allegations of tax fraud, followed by criminal penalties, such as fines and prison time.


Whether a defendant faces jail time for tax fraud depends largely on the crime that he or she is accused of committing. For example, attempting to avoid paying taxes is a felony offense and as such, is punishable by imprisonment for up to five years, and a fine of $250,000 if the defendant is an individual, although corporations must pay a much steeper fine of $500,000. Providing a false statement on a tax form, on the other hand, is punishable by three years in prison, while purposely failing to to file a tax return, supply the IRS with information, or pay taxes on time is a misdemeanor, which is punishable by a one year prison sentence, and a $100,000 fine for individuals or a $200,000 fine for companies.

Contact Us Today to Speak With a Dedicated White Collar Crime Attorney 

Please contact us at 305-670-9919 today to schedule a free case evaluation with dedicated white collar crime attorney Jeffrey S. Weiner, P.A. Criminal Defense Attorneys. Our Miami legal team is prepared to assist you immediately.


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Miami Criminal Attorneys

9130 South Dadeland Blvd
Miami, Florida 33156

Telephone: 305-670-9919
Fax: 305-670-9299

Miami Abogado Criminal Jeffrey S. Weiner website - Delitos de Negocios, Delitos de Drogas y Apelaciones

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