For most people, dealing with the IRS may not be at the forefront of their plans in January, especially when they have not received their w-2’s or corporate bonuses from the past year. Nevertheless, what you do between now and the federal income tax filing deadline (April 17) could subject you to civil or criminal penalties depending on how it is viewed by tax authorities.
Indeed, there may be a difference between what the average taxpayer considers willful and intentional conduct and an honest case of ignorance or neglect. However, what a taxpayer may see as innocent or benign errors may appear to be calculated efforts to avoid paying taxes by the IRS.
This is because the IRS will probably investigate how taxpayers (especially small business owners) developed knowledge to document their income and make a determination as to whether a mistake was made or intentional actions were taken. For instance, if cash deposits comprised the majority of a person’s income and their lifestyle (i.e. assets purchased) did not reflect the income reported on their return, the IRS may think that tax fraud or avoidance may be the cause.
In light of this, and other assumptions about taxpayers, a skilled tax law attorney can help in order to bring the truth to light. Like any other agency bringing an enforcement action, the IRS must prove every element of their case to seek money from you.
If you have questions about IRS inquiries and potential tax evasion or fraud charges, an experienced tax attorney can help.