Legal Definitions - tax fraud

Tax fraud

Tax fraud is when a person or business intentionally falsifies information on their tax return or other tax documents to reduce the amount of taxes they owe. This can include lying about the value of assets, claiming false deductions or credits, or not reporting all of their income. It is important to note that tax fraud must be proven as an intentional act, and does not include honest mistakes made when filing taxes.

Example 1: John owns a small business and decides to underreport his income on his tax return to pay less in taxes. This is an example of tax fraud because John intentionally falsified information on his tax return to reduce his tax liability.

Example 2: Sarah accidentally forgets to report some income on her tax return. This is not an example of tax fraud because it was an honest mistake and not an intentional act to reduce her tax liability.

The examples illustrate tax fraud by showing the difference between intentional and unintentional acts. In example 1, John intentionally falsified information to reduce his taxes, while in example 2, Sarah made an honest mistake. It is important to understand the difference between intentional and unintentional acts when it comes to tax fraud.