3 Common Types of Tax Fraud

3 Common Types of Tax Fraud

No one looks forward to tax day. Even if you believe you will get a huge refund, the filling out and filing of forms can be nerve wracking. What if you forget something? Is making an honest mistake the same as committing fraud? The good news is that, no. The IRS won’t come knocking on your door because you transposed a number or forgot to include income from one of your multiple W2s. They will, however, get in touch with you by mail, never by phone) and ask you to make the necessary corrections.

That’s for the normal, everyday taxpayer. What about those people that purposely attempt to defraud the government? The IRS knows that these people exist, and they aggressively pursue them for the purposes of criminal indictments. There are three common forms of tax fraud perpetrated by individuals and businesses.

1. Underreporting Income

But wait… we just said that this mistake won’t land you in hot water. That’s true if the income was below a certain level and your mistake was just that. The difference between people who get a letter in the mail and those who get a knock on the door are that some people choose to purposely omit large amounts of income in hopes of not having to pay taxes on them. Some people certainly get away with this, but others don’t and they are federally prosecuted. Purposely omitting income from your tax return is a felony that could land you in prison for a couple of years and hit with a huge fine.

2. Faking the Numbers

Some people don’t choose to omit their income, instead they change the numbers. Keep in mind that any employer you have reports your income to the federal government. There is a system of checks and balances in place, making it very difficult to get away with faking the numbers and not getting caught.

Could you potentially type in the wrong number if you are doing your own taxes or using tax preparation software? Sure. But if you expected a $1,000 refund and the software tells you that either your refund is way more than you thought, or that you actually owe money, you should go back through and check what you’ve entered. Faking the numbers on your return can land you in federal prison.

3. Unqualified Deductions

Other people choose to claim deductions that they don’t qualify for. Some may choose to list more dependents than they have, while others attempt to claim deductions that they had no right claiming. In some instances, this is a mistake. In other cases, it is quite purposeful. When it is purposeful, it’s a felony. Consider the fact that anyone found guilty of tax fraud could face fines in the hundreds of thousands of dollars, and it just doesn’t seem worth the risk.

If you have been arrested for a white collar crime in Atlanta, we are here to assist you. Reach out to our office today to arrange for a case evaluation and discover more about how we can help you.

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