Civil Tax Fraud: Should 75 Percent Appear Too Small, Be Thankful the IRS Doesn't Take It All

Stephen Josey and Quentin Manuel examine how the IRS enforces civil tax fraud penalties within the federal tax system, offering practitioners key insights into the legal standards, evidentiary burdens, and practical consequences involved. They explain how civil fraud differs from negligence and criminal tax fraud, highlight the IRS’s reliance on circumstantial evidence and badges of fraud, and outline the significant financial and legal risks taxpayers face when fraud is found. They also address defenses available to taxpayers and emphasize the importance of distinguishing between intentional misconduct and good-faith mistakes in today’s enforcement environment.