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How does the IRS define non-compliance? If an individual taxpayer makes a typo of $1 on a tax form, does the IRS consider that person to be non-compliant? Is there a scope of actions that the word encompasses, or is compliance considered nothing short of filing all required forms and attachments with no errors in entry or calculation?

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  • The point is that since they as a matter of routine round up or down the number to avoid decimals, accuracy is a matter of whether or not you are grossly under or over reporting something for the sake of a benefit that would come from it. Simple as that, if the end of the day nothing would have changed in the outcome, then it is effectively moot. Nov 2, 2021 at 5:37
  • The point I was referring to was the point of the question. The question is intending to ask of the IRS definition of compliance, not the specific case in the title. I apologize for the confusion.
    – user112709
    Nov 2, 2021 at 5:42
  • If you're suggesting that any error in entry or calculation is effectively moot if at the end of the day nothing would have changed in the outcome, by all means source that and make it an answer. (though that in itself doesn't give a definition of compliance...)
    – user112709
    Nov 2, 2021 at 5:45
  • Do you have an example of the IRS using the word "non-compliance"?
    – stannius
    Nov 2, 2021 at 22:34
  • No, I don't, but I have found examples of them using the word "compliance" which implies a definition for "non-compliance"; for the sake of clarity though I should have used "compliance". I apologize for the confusing wording.
    – user112709
    Nov 3, 2021 at 14:43

1 Answer 1

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Internal Revenue Code section 7201 says:

Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.

A typo isn't willful and so does not meet the definition of tax evasion.

The IRS further states

For individuals, a substantial understatement of tax applies if you understate your tax liability by 10% of the tax required to be shown on your tax return or $5,000, whichever is greater.

$1 is less than $5,000, so you wouldn't even owe a penalty for the fact of underreporting. (If they discover it after your tax payment was due, they could charge you a late payment penalty.)

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  • Thank you for the sources. Is non-compliance simply a synonym for tax evasion?
    – user112709
    Nov 4, 2021 at 0:08
  • @saxomophone No, it's not really a synonym. I am mostly ignoring the word "compliance" and answering the majority / body of your question.
    – stannius
    Nov 4, 2021 at 17:47
  • Thanks for your helpful insight.
    – user112709
    Nov 5, 2021 at 2:54

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