As a United States citizen, it's always a good idea to have a strong grasp of the tax system. In addition to federal taxes, you should know where you stand with regard to state and local taxes.
By understanding the system and doing whatever it takes to stay within the legal limits of the law, you never have to concern yourself with trouble. Unfortunately, there are times when people get the idea that they can pay less than what they owe. As a result, the IRS may step in and charge them with tax fraud.
There are many forms of tax fraud, with the following among the most common:
-- Underreporting income. This is the most common form of tax fraud, occurring when people claim less money than what they earn. This often happens when a person earns money in cash, such as a waitress or hairdresser. Note: All income, even if paid in cash, should be reported to the IRS.
-- Using inaccurate numbers. It's easy to believe that there is nothing wrong with changing a few numbers as a means of altering you tax situation. However, if the IRS finds you doing this, it can result in a serious penalty. Making a false statement or falsifying a document is a form of tax fraud, meaning that you could be charged with a felony.
-- Claiming deductions, credits, and expenses that you do not qualify for. It doesn't matter if you are an individual or business, you'll have the opportunity to claim deductions, credits, and expenses as a means of lessening your tax burden. Even so, it doesn't mean you can break the law. You should only claim deductions, credits, and expenses for which you qualify.
If you have any reason to believe that the IRS is going to charge you with tax fraud, it's important to take action right away. Of course, the same holds true if you are already under investigation.
Due to the seriousness of this crime, it's a good idea to consult with an experienced tax attorney. You don't want to attempt to defend yourself, as this could lead to a situation in which you make mistakes that work against you and lead to serious consequences.
Source: Nov. 30, -0001