You no doubt understand the basics when it comes to tax filing. In fact, you may fancy yourself experienced enough to file error-free each tax season. But there are some aspects to handling your taxes that you might not even consider as potential problems – until you're notified by the IRS. No matter how savvy you perceive your tax skill set to be, it never hurts to review some avoidable errors. After all, what you deem a simple mistake the IRS may classify as tax evasion, or even fraud.
A Debatable Distinction
So you know not to run afoul of the IRS, but the difference between negligence and willful intent can come down to a matter of perception. As such, it's essential to understand that tax evasion indicates that you intentionally (or, perhaps, unintentionally) avoided filing and/or paying taxes. Tax fraud, on the other hand, denotes a more insidious endeavor: cheating the government for financial gain by falsifying tax information.
The bad news is that you can be subject to severe penalties in either case, including legal prosecution and time behind bars. Given the surge in instances of tax fraud over recent years, the IRS is becoming increasingly intolerant of scammers and cheats. And while you would likely never engage in an underhanded enterprise against the government, you might want to consider some ill-advised scenarios:
Resolving an Issue
Regardless of the type of IRS issue you're grappling with, a smart move is to enlist a licensed tax professional. No matter how much debt you have or how aggressive the collection action, accepting assistance from a seasoned professional can support the perception that you're working to resolve the issue. And as long as you make smart, well-informed decisions when it comes to your filing habits, there's no IRS problem that can't be handled.