Every so often, we read a news story about a famous or powerful person facing charges of tax evasion. Often, these stories will include a quote from a representative for the defendant who says that their client did not intend to evade taxes, but merely made a mistake.
Does this distinction matter? Can a person successfully defend against tax evasion charges on the basis of mistake? Generally speaking, the answer is yes.
Under federal law, tax evasion is an intentional crime. To convict you of tax evasion, the IRS must prove you intended to underpay your taxes. If the IRS can’t prove that, or believes you merely made a mistake, it may require you to pay a fine, but you won’t face criminal charges.
Partly because it is not easy to prove the intent aspect of the crime, the IRS tends to pursue criminal prosecution only in especially blatant cases. For instance, it might pursue criminal charges against a person who or company that has failed to file taxes for several years in a row despite being notified of the problem by the IRS.
For other taxpayers, the IRS tends to avoid criminal charges. Instead, it typically imposes fines. Sometimes it works with the taxpayer to develop a payment plan. Fines and payment plans are much better to face than criminal penalties, but they can still be tough.
Whether or not you’re facing criminal charges, it’s important to have help from a lawyer when you run into trouble with the IRS. A lawyer can advise you on your options, represent you at hearings and skillfully negotiate ways to settle your issues.