Report Tax Fraud And Avoid The 'Pain' Of IRS Penalties
Understand and avoid tax fraud in your financial accounts. Know the IRS and reporting obligations necessary in your income tax report and penalties under law.Tax Fraud And Where It Lands You
* When You Defraud State Or Federal Governemtns. Tax fraud and tax avoidance are generally lumped together by the IRS or by state taxing bodies, on the assumption that each action shares a common underlying motivation, namely to defraud the local state or federal authorities from receiving legally mandated tax payments.
* Tax Fraud Is Not The Same As Tax Minimization. Regardless of reporting obligations tax fraud, however, is not synonymous with tax minimization which separately seeks legitimate strategies to lower overall tax obligations within the parameters of then current law.
* How Does Tax Fraud Conspiracy Work? How does tax fraud work and what are the possible penalties under law? At its simplest level, tax fraud assumes the form of " don't ask, don't tell" where the delinquent tax debtor simply fails to report income tax.
* High Tax Countries Forcing An Emerging "Underground Cash" Economy. In high tax countries such as Canada where stiff penalties exist for income tax fraud, a significant and thriving "underground" cash economy connects buyers and sellers regardless of tax fraud reporting obligations.
Professional economists might well argue that income tax fraud, as evidenced by a robust underground cash economy, reflects a "market response to perceived tax inequity". In reply to tax fraud or related IRS reporting, law makers must either contemplate new laws, new enforcement budget expenditures, knowing full well that the underlying rate of tax fraud will remain steady as people merely respond with new innovations in order to avoid detection.
* National Solution - Flat Tax Mandate Like Russia. At the federal or national level, freshly democratized nations like Russia candidly acknowledged the existence of income tax fraud and a substantial and growing criminal economy.
Rather than structure feeble legislative responses to tax fraud, the Russian parliament took the bold move of reducing the entire tax code to a flat 17% for corporate and individuals alike. Presto! Tax fraud became instantly less productive, cost too much in time and annoyance to carry out, so tax debtors simply paid up. In turn, as tax fraud diminished as a market force, federal tax receipts escalated.
* Small Company Under The Counter Scams. How do more complex forms of income tax fraud work and what does the IRS do to counter the requirement for full disclosure and reporting? Small partnerships, C corporations, limited liability companies and private trusts often represent a temptation to founders to attempt tax fraud.
A common area of tax fraud occurs when "personal expenses" become imbedded in corporate expenses, thus resulting in tax fraud where write-offs are taken.
IRS tax fraud occurs as well when a partner or manager or beneficiary makes "shareholder loans" to the company, where the terms and conditions of the note or borrowing are either not recorded or are dramatically at odds with prevailing interest rates. The tax fraud report that the IRS creates in this case will show that the share holder "loan" props the corporation which, in turn, experiences losses, which in turn can be used as write offs for the shareholder's personal return.
Thus, ba da bing, tax fraud is accomplished while the shareholder converts personal income to loans which are "washed" inside the corporate accounts. In this form of personal-corporate interplay, income tax fraud reporting does not occur which results in local state and federal tax avoidance, which costs the rests of tax payers who unknowingly subsidize the tax fraud carried out by a small number of people.
* "Piercing The Corporate Veil" To Prove Fraud. Where a corporation is dominated by a shareholder, greed and income tax fraud schemes abound. In order to successfully litigate where substantiated tax fraud report occurs, the courts have established a range of case law precedents necessary to "pierce the corporate veil" and to expose the income tax fraud scam for full prosecution.
Offshore tax schemes tempt organizers to utilize tax fraud non reporting schemes. Fortunately, major tax havens such as Switzerland work with the EU, Great Britain and the USA to minimize tax fraud, without jeopardizing the "privacy" laws unique to financial centers.
* Bottom Line - Play Smart & Legal. Income tax fraud is illegal and should be avoided. " Pay your taxes and get a good night's sleep" may be the best and simplest advice for people contemplating tax fraud reporting schemes.
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