Types of Tax Fraud

According the law, tax fraud occurs when an individual or corporation enters into an illegal scheme to avoid paying taxes.Almost every year , the government estimated that about 12-14%  of federal revenues are disappearing because of tax fraud.

Types of Tax Fraud

There are many schemes employed to avoid paying taxes. Common types of tax fraud include:

- Offshore accounts fraud
- Corporate tax fraud
- Employment tax fraud
- Money laundering tax fraud
- Abusive tax shelters

The distinction between tax avoidance and tax fraud can often be difficult to discern. Generally, the IRS will evaluate the taxpayer’s state of mind when determining whether tax avoidance or tax fraud has taken place. In order for an individual or corporation to be found guilty of tax fraud, the IRS must demonstrate willful intent to withhold tax revenue from the federal government. This determination will have important consequences on whether criminal or civil actions will be pursued.

Actions which may demonstrate a willful intent to withhold tax revenue include:

- Failing to file a tax return
- Intentionally underreporting or omitting income
- Claiming false deductions
- Hiding or transferring assets or income
- Overstating the amount of deductions
- Making false entries in records
- Failing to report income earned in a stock exchange
- Keeping two sets of books
- Misusing trusts
- Abusing charitable deductions

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Posted by P.Jeanelle on Aug 28 2010. Filed under Business, Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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