It is not uncommon for people to make trivial errors when filing their federal tax returns. Confusing tax codes can make it complicated to fill out paperwork, especially if filing without the help of a tax expert. According to the Internal Revenue Service, approximately 17% of Americans make mistakes to some extent on their returns and fail to comply with tax codes. However, just because people make mistakes does not necessarily mean that they intentionally commit tax fraud. The Criminal Investigative Division of the IRS is made up of attorneys and accountants that investigate potential tax fraud cases. People and companies that have engaged in acts of tax evasion or fraud may face penalties, hefty fines and possible prison time. 

Used as a general term, tax fraud encompasses a wide-variety of laws regarding the tax code. 

This includes offenses such as: 

  • Forgery 
  • Underreporting income 
  • Falsifying information on the return 
  • Inflating business expenses and costs 
  • Making false deductions 
  • Preparing and filing a false tax return 

Yet, in order to prosecute these offenses as criminal charges, the acts must be done intentionally and willfully, not by simple oversight or mistake. 

When criminal investigators look into cases of potential fraud, they check for specific behaviors that flag suspicious activity. These include poor record keeping, failure to answer questions and cooperate with tax investigators, altering checks, creating false receipts, using fabricated social security numbers and claiming dependents who do not exist. Investigators may keep their eyes on companies and people for years, gathering information until they have what they need to press charges. Charges include fines starting at $100,000 in some cases. Jail time may vary depending on the severity of the tax fraud committed.