What is Tax Fraud
Are you worried about potential tax fraud charges? Have you already been charged with tax fraud? Don’t talk to anyone until you’ve spoken with our team at The W Tax Group first.
Surely you aren’t surprised that cheating on your taxes is considered a criminal act. There are many people who make mistakes on their tax returns, but the IRS doesn’t usually go after people for small mistakes. In fact, most tax returns will have one or two small mistakes on them, but the IRS is generally understanding of this.
What they don’t like is when you are deliberately trying to minimize your tax liability, otherwise known as fraud. The IRS will stick it to you if you’re caught obviously committing tax fraud. That’s when you’ll need a tax fraud lawyer in your corner.
Why do they care so much about this? Because tax fraud takes millions of dollars from the government each year. It’s illegal, and they will come down hard on you if they think you are intentionally deceiving them.
There are a few things they can do if they catch you cheating on your taxes: tack on penalties, tack on civil penalties, fine you; they can even refer you to the IRS Criminal Investigation Division, and you could go to jail or prison if convicted.
Defining Tax Fraud
Tax fraud is when a person intentionally lies on a tax return for the purpose of lowering their tax liability. Tax fraud mostly occurs with middle-income earners and corporations, but anyone can do this.
For instance, a waitress who doesn’t report all her tips is committing tax fraud. By not reporting her income, she’s minimizing her overall tax liability.
There are many ways that a person can commit tax fraud. For example, a family might overstate a few deductions. A business owner might keep two sets of books in order to hide the accurate amount of money they’re making.
The following are a few more examples of tax fraud:
- Overstatement of deductions
- Claiming deductions you aren’t entitled to
- Lying about dependents
- Claiming personal expenses as business expenses
- Using a false Social Security number
- Deliberately not reporting income or underreporting it
- Hiding assets
What’s the Difference between Tax Avoidance and Tax Evasion?
Most people would like to avoid paying large tax bills, and there are legal and legitimate ways to do this.
For instance, donating money to the charity of your choice can minimize your tax bill and ensure that your hard-earned money is going somewhere you want it to go.
You can donate to your school, put money into retirement accounts, take advantage of health savings accounts, and put money into certain college savings accounts. You can also make sure that you take full advantage of any deductions you are entitled to.
The above are all examples of avoiding paying taxes, but these are all considered legal ways of doing so.
Tax evasion, which is essentially the same as tax fraud, is when you are trying to avoid paying taxes and you use illegal means to do so. Not filing your tax returns at all is a form of tax evasion. Moving money from your bank account into a family member’s is called hiding assets to avoid paying taxes and is illegal.
Many business owners and corporations also try to get out of paying money in taxes. The bottom line is that if you believe the government is coming after you for tax fraud, you should get help before it’s too late. The fines for committing tax fraud or tax evasion are substantial, and you can also go to prison for committing these crimes.
What If I Made an Honest Mistake?
Negligence is when a taxpayer accidentally makes mistakes on their tax returns: for instance, forgetting to include income from a side job that you did months before and forgot about, or miscalculating how much you donated to a charity.
The IRS is mostly understanding of negligence, and while you will likely receive a penalty for this, you usually won’t be pursued for criminal behavior.
Get in Touch with a Tax Fraud Professional
If the IRS suspects you of committing tax fraud or evasion, you’ll want to talk to a tax professional right away. Your tax lawyer can analyze your situation to figure out what the best course of action is. In some cases, paying the tax liability might be enough to get the IRS to back off and not pursue criminal charges against you.
Get a free consultation and learn your options from The W Tax Group right now at: 1-877-500-4930