When you have serious tax issues, you need someone who knows tax law

Is it illegal to make mistakes on your taxes?

This is your first year running your own business and doing your taxes. It’s still a small operation, so you don’t have an official department to do this for you. You’re just filing the taxes on your own, as the owner and sole employee of the business.

However, you have no tax training. You went to business school, but you’re not a tax accountant. You know that you could certainly make mistakes or overlook something important. You’re worried that doing so would be illegal and that the IRS would either issue a hefty fine or show up at the door and arrest you. Is this something you should be worried about?

Was it intentional?

Tax mistakes, as long as they are actually mistakes, are generally not illegal. They happen every day, and they come from both businesses and individuals. Many people who are doing their taxes have no tax training, just like you, and errors happen.

This is only a serious legal issue if the IRS can show that the mistake was intentional. For instance, if you leave off a third of your income because you do not want to pay taxes on it, so you fail to disclose it, then you have broken the law if the IRS finds out what you did. But if you simply misplaced paperwork, entered the wrong number or accidentally overlooked some of your income, that’s not illegal. A fine may still be imposed, but you haven’t broken the law because it was an honest mistake. Unfortunately defining this distinction between an intentional, or willful, error and a mistake is not an exact science — and you can bet the IRS is unlikely to give you the benefit of the doubt.

What are my options?

If you are facing these sorts of complicated problems and you’re concerned about your future and the future of the business, be sure you know about all the options at your disposal.