In case you violate the tax law by misrepresenting your income or fudging numbers to avoid paying taxes you most likely be committed by tax fraud. Tax Fraud implies an individual paying less taxes or wrongfully soliciting for repayment of tax by acting in a unethical way. Tax Fraud is a planned action by a person and is not an act of negligence through the concerned person. Fraud of Tax is a criminal offense and as a result of it the government needs to endure great loss in revenue for the people submit less money as tax to the government. Those found to be cheating on their taxes would possibly be subject to fines, penalties or imprisonment. Tax evasion is a general term which refers to all those techniques and efforts that are implemented by numerous companies, individuals, and firms to avoid taxes through illegal means. Tax evasion usually involves false representation in the earnings of a firm or company to the tax authorities.
A person goes for Tax Fraud for he wants to pay less money to the government as tax and save more money for himself. A few of the ways a person be able to break the tax law and commit tax fraud comprise: Claiming false deductions, Concealing or transferring property or income, Intentionally varying the income, Over reporting the amount of deductions, Possessing two set of books, Recording personal bills as business expenses and Applying false amounts in books and records. Tax collection efficiency has two sides to it: Tax compliance/tax evasion on the part of the taxpayer, and honesty/corruption on the part of the tax collector. Tax evasion involves collusion between the taxpayer as well as the tax collector. Corrupt collectors also are considered one of the reasons for Tax fraud occurrence.
The IRS warns that tax scams, fraud and outright cheating could create tax season a lot less pleasant than it already is in case you get caught. Tax crimes comprise submitting a false tax return, tax evasion, submitting false documents, failure to collect employment taxes, failure to pay for taxes, and failing to file a tax return. The penalties for criminal tax fraud are harsh and serious. Sanctions are legal measures used to deter individuals from committing more benefit fraud. There are three possible sanctions: Prosecution, Administrative penalty (an extra amount of money that should be paid back along with your overpayment) and Formal caution. Prosecution is the most critical impact of a fraud investigation. The individual will be taken to court and prosecuted for the offence they’ve committed. A guilty verdict can result in a range of sentencing, from costs and a fine, through community service, to imprisonment. An Administrative Penalty is offered when the case is not so serious and is an extra amount of money to pay, which is calculated at 30% of the total overpayment. A Formal Caution can be given if the individual admits they are guilty of the offence. The caution will stay on Department for Work and Pensions (DWP) records for five years. If the person commits an additional benefit offence while they have got a caution on record, it is almost distinct that they will be prosecuted for the new offence. In lots of cases, IRS will prohibit you from the benefit of specific credits if you are guilty of fraudulently claiming the credit.
So while all of us hate paying taxes and want to pay as little as possible, don’t fall for any of these schemes. You’ll end up paying your taxes in the end. You can either pay them now and avoid jail, fines and the interest on your original tax bill or you can pay them later plus interest, fines and possibly enjoy a holiday at a federal resort. We also urge you to keep in mind the Golden Rule: If something seems too good to be true then it probably is.
Article Source: http://www.articlesbase.com/taxes-articles/what-is-tax-fraud-and-its-consequences-4654025.html
About the Author
KDK Accountancy Corporation with Katz, Daitzman & Kiesel CPAs, LLP (an Orlando CPA Firm) is an accounting firm offering comprehensive services to Central Florida businesses and individuals.Our wide range of services include accounting, bookkeeping, tax preperation, tax planning, IRS problem resolution, and all areas of financial and estate planning. KDK Accountancy Corporation is a certified Quickbooks Pro Advisor and can work with clients with all aspects of implemeting and perfecting accounting software performance in the business environment.
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