Tall tales abound, even when it comes to paying taxes.
While there are few people who enjoy paying taxes, almost everyone in the community benefits from the exercise. Funding important social programs, payments to state and federal employees, and maintaining critical and local infrastructure are just a few ways your tax dollars work.
There are ways to avoid taxes and there are ways to evade taxes. Sometimes myths or stories take hold that become widely circulated enough to be assigned some credibility. Let’s consider a few:
- Percentages, percentages, percentages: Every couple of years a new percentage story arrives on the front pages or at the virtual water cooler. For some time, it was “47 percent of Americans do not pay federal taxes.” More recently that figure rose to 57 percent of American households. A closer look, reveals many lower-income households and young adults do not pay federal taxes, but often pay state and local taxes. The statement is not a sweeping edict on tax evasion. Harder facts support a different percentage truth—that the one-percenters dodge taxes on a large percentage of their income and contribute to the U.S. tax gap. Gleeful commentary provided by a former resident of the White House points to the many strategies and loopholes available to higher asset taxpayers to avoid paying income taxes.
- Foreign bank accounts and offshore tax havens account for most tax evasion: The word “tax haven” conjures visions of palm trees, mega-yachts, and cloudless skies. Well, yes and no, it may be sunny in the state of Wyoming but there are not many palm trees. Recent reports suggest the U.S. is the number two secrecy jurisdiction on the planet after the Cayman Islands for illicit flows of global wealth.
- Errors on returns prepared by tax preparers are not your responsibility: Accountants and professional tax preparers are in the business of numbers and reporting. It goes to follow they have a high concern for the accuracy of the reports and returns they prepare. If a tax preparer is provided inaccurate information and prepares a false income tax return, the responsibility for the mistake—or the tax fraud—is yours when you sign your return prior to submission. Similarly, if an accountant introduces dubious information to your return, including fake deductions or losses for the purpose of boosting your refund—you and the tax preparer could be charged with a tax crime for filing a fraudulent tax return. Also, read your return before you sign on the bottom line.
If you invested in a sure-thing pitch to avoid paying taxes and receive a letter from the IRS notifying you of an audit, here is accurate, important advice—speak with an experienced criminal tax defense attorney to understand your options before responding to the IRS.
Strategic legal representation on criminal tax defense and tax litigation in Chicago and Cleveland
The tax attorneys at Robert J. Fedor, Esq., LLC help individuals and entities nationwide respond to allegations of criminal tax fraud, IRS audits, and other tax controversies. When you need straightforward strategic advice locally or abroad, contact us or call 800-579-0997.