The Internal Revenue Service (IRS) is always on the lookout for those who try to cheat in the tax game. The IRS does not mess around and meticulously reviews the tax returns of all individuals and companies as well as the annual financial reports and any document that may hide a tax fraud.
Okay, we understand that the IRS has to be respected and a little afraid, but what exactly is a tax fraud in the United States?
The IRS defines tax fraud as deception by misrepresenting material facts or silence when good faith requires expression that results in material harm to the one who relies on it and has the right to rely on it. Bah, very technical and complicated that definition.
Let’s put it in other words: when someone is tricked or swindled into handing over money or something else of value, we are talking about fraud. but be careful, when we are talking about tax fraud there must be an intentional illegal action to avoid paying certain taxes or evade them in some way.
- The IRS defines two essential criteria to define what a fraud is:
A tax liability that is due or overdue. - Intent to avoid liability by fraud.
And taxpayers are usually very creative when they try to evade taxes and there is usually no limit where creativity begins and where it ends. no matter how it is disguised, the IRS will find a way to find tax fraud and punish it when appropriate.
Where Does the IRS Look for and Find Tax Scams?
Of course, the classic way to try to avoid or intentionally avoid paying a tax obligation is in the annual tax return. They are often the scene of criminal activity: The most common attempts to evade taxes include making inappropriate deductions or claiming fictitious losses or loans.
Tax fraud can also be carried out by employers who are sub-owners of companies that do not collect and deliver payroll taxes to the government. The dispute over payroll taxes turn into severe criminal charges from the investigation reveals that payroll taxes were withheld but not reported or given to the IRS.
In some paradigmatic cases, it has been detected that business owners use taxes to finance a luxurious lifestyle or improve the balance sheet of the company that is in the red numbers. Once again, a lot of attention here because the IRS has a fine radar for those who defraud the government by evading payroll taxes.
A third well-known fraud is that of maintaining and investing assets in offshore or foreign bank accounts that, in the eyes of the IRS, is a kind of tax evasion, therefore it leads to fraud, in many cases.
While putting money in offshore accounts outside the United States can be a way to protect and increase your wealth, you have to be very careful and surgically operate those money movements always talking to a tax lawyer about what are the implications and the limitations established by the IRS and the Federal Government.
If You Are Involved in Tax Fraud, You Should Do This Immediately
If you find yourself in a tax fraud case, the first thing you have to do is act quickly and get legal advice from a specialized lawyer. immediately stop what you are doing that could be considered fraudulent activity. If you have filed incorrect tax returns or participated in other tax evasion activities, you should immediately stop and discuss it with your lawyer. he will recommend you exactly how to proceed with the IRS.
Gather all the documentation related to your tax situation, including tax return receipts invoices and any other information that may be relevant to the cause. Organize the information in a clear and accessible way so that the IRS understands it, and you get the help you need.
Once you have the information sorted and a lawyer by your side, contact the IRS to establish a plan of action. Be proactive and take the initiative before the IRS finds the tax fraud and takes it to court.
Several networks offer several possibilities for you to address the problem voluntarily: taking them responsibly will always play in your favor before the agency.
- Voluntary Disclosure Program (VDP): This program allows taxpayers who have made mistakes or omitted information on their tax returns to correct their situation voluntarily and reduce possible penalties.
- Offer in Compromise: In some cases, it may be possible to negotiate an agreement with the IRS to pay an amount less than the total debt owed, plus interest and penalties.
- Appeal Procedure: If you disagree with the IRS determination, you can appeal the decision through a formal administrative process.