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Accounting Information > Income Taxes > Tax Fraud

Tax Fraud

             Tax fraud is a serious problem that ends up affecting all of us by resulting in higher taxes and higher prices.  The definition of fraud is deception practiced deliberately for the purpose of receiving unfair or unlawful gain.  In the world of taxes, it is often referred to as cheating by purposefully paying less tax than one legally should be paying.  Specifically, tax fraud is a purposeful act committed with the intention to defraud the Internal Revenue Service.  There is a huge difference between fraud and just making an honest mistake or math error on your income tax return.

             There are many ways that people commit fraud related to taxes.  Often, waiters and waitresses do not report all of their tips received in cash.  The result of this is that they are not taxed on their full income.  The most common form of tax fraud is the under-reporting of income.  This is a common problem with self-employed taxpayers, who fail to report all of their income, as well as overstating business expenses.

 

             If an auditor discovers fraud on your return, you will face civil fines and penalties.  Also, they might send your case to the criminal investigation division of the IRS.

             There are serious penalties for those convicted of tax fraud.  The fines and lengths of imprisonment vary based on the type of infraction.  It is a felony to intentionally try to evade or defeat any tax or tax payment, and someone convicted of this crime faces imprisonment of up to five years, fines of up to $250,000 for individuals and $500,000 for corporations, or both.

             Another felony is the willful failure to collect or pay over any required tax.  The legal penalties for this crime are imprisonment of up to five years or fines of up to $250,000 for individuals and $500,000 for corporations, or both.  The intentional failure to file a return, supply information, and/or pay tax when required is a misdemeanor, and the perpetrator faces imprisonment of up to one year, fines of up to $100,000 for individuals and $200,000 for corporations, or both.  A person who files a return or other document with a declaration that the information is true when the person knows it is not true, can be guilty of a felony.  The punishment for this can be imprisonment for up to three years, fines of up to $250,000 for individuals and $500,000 for corporations, or both.

             If someone assists or advises the intentional use of false information and statements, they can be found guilty of a felony.  The penalty for this could be imprisonment of up to three years, fines of up to $250,000 for individuals and $500,000 for corporations, or both.  If someone is convicted of conspiracy to defraud the United States or any agency of the United States, they face imprisonment of up to five years, fines of up to $250,000 for individuals or $500,000 for corporations, or both.

             If you are looking for a CPA or Accounting Firm to assist you with your income tax reporting, bookkeeping, financial planning, or general accounting needs, then you have come to the right place!  Try out the CPA Search feature on this website to find a qualified professional in your area.

           

 
 
 
 
 
 
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