News / Article

Dear IRS: Sorry, A Typo On My Taxes Dropped Some Zeros

Source: forbes.com - Feb 22, 2017

Tax time is here, with all those annoying Forms 1099, W-2 and K-1. Sometimes, the forms dribble in even after you’ve filed your return. There may be some surprises too, where you think you were paid $1,000, but the 1099 says $100,000! If your income is all there in black and white, you may not have many choices. But what if you somehow report less than you should? When it comes to mistakes, what kinds of mistakes the IRS can forgive. Some mistakes are crippling, and the more complex your affairs, the more you and your tax adviser may have to make judgment calls.

But suppose you do misstep. Are you better off being honest and ignorant, or more clever and conniving? Clearly the former. Sure, taxes are complex. That might cause you to assume that just about anything can be called an innocent mistake. Actually, the tax law draws a line between non-willful and willful. Willfully evading federal income taxes is a felony. See 26 U.S.C. § 7203. “Willful” usually means voluntary or with intent. You are willful if you intentionally violate a legal duty of which you’re aware. Yet what IRS calls ‘willful’ can be tough to predict. And even if you’re ignorant, the IRS can say you are guilty of willful blindness–where you intentionally remain ignorant!

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Category: General Business