Tax Return Fraud

tax return fraudAs United States residents we are legally required to fill out and file a tax return each year to determine what we owe to the government. While the majority of Americans honestly file their tax return, other do so fraudulently. Those would commit tax fraud are attempting to cheat their way out of their tax obligations.

What is tax return fraud?

Tax return fraud is when an individual intentional violates their legal duty to voluntarily file income tax returns, avoiding paying the accurate amount of income tax, supplying incorrect employment information and/or earnings, there for avoiding paying the proper amount of taxes that they owe. Those who neglect their legal tax obligation are posing a threat to the tax administration and the economy. Those suspected and caught committing tax fraud will be charged with tax fraud through a Criminal Investigation by the Internal Revenue Service (IRS).

Common ways of committing fraud

Those committing tax fraud are misrepresenting their income or fudging numbers to avoid paying taxes. Common tax law violations include:

  • Knowingly changing your income
  • Using false amounts in books and records
  • Claiming false deductions
  • Possessing two set of books
  • Concealing or transferring assets or income
  • Over reporting the amount of deductions
  • Recording personal expenses as business expenses

Tax fraud convictions

In past years there were 2,472 Americans were convicted of tax crimes that is .0022% of all taxpayers. This number is rather small seeing as the Internal revenue service, IRS, suspects nearly 17% of Americans committing tax fraud. The number of those convicted of tax fraud has continued to decrease over the past decade.

The IRS says that 75% of those committing tax fraud are individuals, mostly middle-income earners. Corporations make up the other 25% of those committing tax fraud. According to the IRS the cash-intensive businesses and service industry workers are the worst offenders of tax fraud.

Most common businesses committing tax fraud
  • Self-employed restaurateurs
  • Clothing store owners
  • Car dealers
  • Telemarketers
  • Salespeople
  • Doctors
  • Lawyers
  • Accountants
  • Hairdressers
  • Waitresses and Waiters
  • Maintenance and Landscaping
Negligence or Tax Fraud?

Everyone makes mistakes, sometimes it happens on tax forms. The major difference between a mistake, negligence and tax fraud is on is clearly unintentional. Those who make a careless mistake on their taxes can be looked at and ignored by the IRS, for major mistakes the individual can be receive a penalty. Those who intentionally commit tax fraud are not doing so to save pennies, they are off by thousands. The government seeks out those people, investigates and charges them accordingly. Getting caught committing tax fraud will result in a complete audit of your personal and/or business records. Those being charged are often advised to seek legal advisement.

The penalty of tax fraud

A careless mistake on your taxes can result in 20% deduction penalty on your tax return. While not good it is better that the alternative to those convicted of tax fraud. Those convicted of tax fraud pay up to a 75% civil penalty.

While many commit tax fraud each year not nearly as many are caught. IRS reviews accounts with open eye, major discrepancies are what they look for. Trying to convict those who are committing serious tax fraud. Regardless to how major or minor your tax fraud is getting caught can lead to stiff penalties and even jail time.

Do not risk committing tax fraud, you could be caught and prostituted.

Reporting suspected tax fraud

If you suspect an individual or business of committing tax fraud you are advised to contact the Internal Revenue Services (IRS) by visiting the IRS website, filling out Form 3949-A online, print it and mail it to:

Internal Revenue Service
Fresno, CA 93888

For those who choose not to fill out the form they can mail a letter to the above address.

While not required to submit your personal information those who report tax fraud and the individual or business are found guilty the reporting person is eligible to receive an reward.

Tax Fraud Alerts

Tax fraud alerts can be found at,,id=121259,00.html