While “tax fraud” is often considered a catch-all phrase, the term describes a particular type of tax crime involving fraud and willful intent.
Tax fraud are types of actions taken by a taxpayer seeking to avoid paying taxes due. Frequently, an IRS audit uncovers taxes owed and just as frequently, the taxpayer may claim it was an unintentional mistake.
Many types of mistakes are made on income tax returns. While actual mistakes do not merit a criminal tax investigation, they do involve correction of the return, payment of taxes due, and a penalty that represents a percentage of the unpaid taxes owed.
To determine whether you might be involved in tax fraud, an IRS investigator may look for tell-tale signs that errors on your return are not errors, but an intentional effort to avoid paying taxes owed. Signals that immediately qualify you for tax fraud include:
- Problems with the social security number: Using a falsified social security number on a tax return is a red flag that signals you have filed a fraudulent tax return.
- Failing to accurately report income: If your return is targeted for investigation, the IRS has the means to reconcile whether your income figures are correct. Suspicions about actual income can spill into an audit or an investigation if it appears the numbers you report do not track with reporting available to the IRS.
- Falsification of documents: It is not unusual for taxpayers who are committed to evading their taxes to claim fake dependents, false deductions, and more. Do not provide the IRS with a falsified document; it is diamond clear support for an allegation of tax fraud.
There are many types of tax fraud, not all of which directly involve a false income tax return. That said, people who engage in tax dodges that earn them big dollars often do not report that boosted income on their tax return. If this is you, when you are caught, the IRS will absolutely pursue taxes and penalty on your ill-gotten gains.
When preparing your taxes, or reviewing personal or corporate taxes prepared for you, remember that mistakes—intentional and otherwise—are expensive. Confirm the numbers, ensure documents are accurate, and remember when you sign your tax return, you are taking personal legal responsibility for the figures therein.
If you already know your return does not accurately reflect your actual income, from whatever sources, speak with an experienced tax attorney before you file your return. The period before you have been charged with a tax crime is always a better time to work out your options for avoiding criminal tax prosecution.
Experience legal representation on criminal tax defense, tax litigation and offshore tax disputes
From offices 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 controversy. When you need straightforward strategic advice locally or abroad, contact us or call 800-579-0997.