Does willful v. non-willful matter when it comes to tax crimes?

Getting accused of a tax crime is a serious matter. The allegations can range from a relatively minor discrepancy that results in a financial penalty to major errors that lead to prison time. One of the key factors that will determine the severity of the allegations is whether the government claims the crime was willful.

What does it mean to be “willful” when it comes to tax crimes?

The term willful refers to an intentional act. The government is often much sterner with those who are accused of intentionally avoiding tax obligations as opposed to taxpayers who can establish the error was an honest mistake.

Is there really a difference in the penalties?

Yes. As noted in a recent piece that delves into the penalties that come with a failure to report certain cryptocurrencies like Bitcoin, a non-willful violation comes with a $10,000 penalty per account per year. However, if the government can establish the violation was willful, the penalties can increase to $100,000 or 50% of the amount held within the account.

Is it difficult to establish willfulness?

Unfortunately, not. In some cases, the government can simply argue any “reasonable” person would have known of the tax obligation to establish willfulness. As a result, it is important that anyone who is accused of a tax crime take the matter seriously. If the allegations involve large amounts of money, it is wise to seek legal counsel to review the allegations and build a defense to better ensure your rights are protected.

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