Each year, the IRS estimates that 17 percent of taxpayers do not comply with the tax code in some manner. However, only .0022 percent of taxpayers are convicted of fraud in a given year. This is because the IRS typically gives the benefit of the doubt to those who make mistakes on a tax return. What does the IRS consider fraud as opposed to a simple error on a tax return?
Tax fraud ranges from failure to pay taxes to failure to file an income tax return. Fraud also occurs when a taxpayer willfully fails to report some or all of his or her income. If a false tax return is submitted or the return contains a fraudulent social security number, the IRS may assume that someone is attempting to commit fraud.