Speak From the Heart
Fraud or Negligence … Is There a Difference?
How does the IRS know the difference between simple negligence and tax fraud?
generally do the rest. They also know that tax fraud is mostly committed in cash-intensive businesses and by service industry workers. They know that the people most likely to commit fraud are self-employed restaurateurs, car dealers, clothing store owners, telemarketers, lawyers, doctors, and accountants.
It can be hard to draw a line between the two. You’re an honest citizen, but you’re human, and mistakes can happen when you file your taxes. This can look like you're trying to cheat your way out of paying taxes. Now, you might be afraid that even the IRS doesn’t see the difference, but that's far from the truth. They know exactly how to spot the difference between the two. First of all, it’s important to note that the IRS is not actively searching for mistakes or attempts to break the law. In most cases, their auditors give you the benefit of the doubt, as they are well aware that most of us don’t try to commit tax fraud. In addition, the IRS knows which type of people are most likely to commit fraud by looking at their profession. You might even be able to guess some of those yourself. Not Everyone Cheats
Heavy Training
In addition to the fact that the IRS knows who the most likely offenders are, their auditors are trained to look for tax fraud. Precisely because of that training, in most cases, they can easily tell the difference between tax fraud and simple, ordinary negligence. Even though they can usually tell the difference between the two — by looking for the most common ways people make mistakes — auditors can make mistakes too.
In rare cases, even the most trained IRS auditors come to the wrong conclusion, and an honest person gets to pay the price.
The IRS knows that most of those (at least 70 percent) doing the cheating are middle-income individual earners. Corporations
Thankfully, you can avoid this by being careful when doing your taxes, just in case.
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