Types Of Tax Crimes And How To Avoid Them

Types Of Tax Crimes And How To Avoid Them

According to the IRS, Americans fell short when it came to paying taxes in 2007 – over $340 billion short. When it comes to the money that funds government agencies, national debt interest, public safety net programs and defense/security, a figure of $340 billion can make a big difference in how our government provides for its citizens. Because of this, the IRS employs thousands of agents to oversee the enforcement of tax laws. These agents work hard to ensure that the gap between the taxes received and what should have been received diminishes every year.

IRS employees are as human as the rest of us – despite extensive training and a sharp eye for details, mistakes can still occur, and do. If you’ve been accused of fraudulent tax reporting or other tax crimes, it’s important to understand what the accusation means and what penalties it may carry. Below are some of the most common types of tax crimes and what they could mean for you if not swiftly and successfully contested.

Among the most prevalent tax crime is tax evasion, in which one fails to report their taxes accurately. A common indicator is when someone with many assets reports a disproportionately low income, or when someone with a small income attempts to report a large number of deductions. Just some of the potential penalties for this are fines, jail time, or a seizure of assets.

The IRS takes just as seriously anyone who fails to file their tax return altogether. Penalties may be avoided by proving a reasonable cause for not filing on time; this is not always easy, and may still result in having to pay 5% of the owed amount per each month overdue.

If a revenue officer or other IRS employee is in touch with you, keep in mind that providing a false statement of any kind can cause big trouble. Anything that could be misinterpreted runs the risk of damaging your case, and if pursued by officials could lead to criminal indictment.

When it comes to businesses, an employer usually withholds a certain amount of an employee’s pay for tax purposes. Until it reaches the IRS, however, it’s a matter of trust that the employer will indeed put the money in the right place. A failure or inability to file such taxes could lead to the extraction of the necessary funds from other sources, such as business partners or employees in a position of high power.

Sometimes a crime doesn’t have to be committed to be viewed as a hostile action towards the IRS. Conspiracy to commit a tax crime is taken very seriously, and once proven in court can lead to a separate federal offense.