![]() ![]() ![]() Tax fraud is defined as a willful act done with the intent to defraud the IRS-that dark area beyond honest mistakes. The Auditor Suspects You of FraudĪuditors are trained to look for signs of tax fraud, which is a form of tax evasion. In the vast majority of cases, the auditor won’t call in the CID. If you are caught in a tax lie by an auditor, she can either slap you with a penalty or refer your case to the IRS’s criminal investigation division (CID). Tax crimes are most likely to be first spotted during an audit. Surprisingly, the IRS contends that only 6.8% of deductions are overstated or just plain phony. Telemarketers and salespeople came in next, followed by doctors, lawyers (heavens!), accountants (heavens, again!), and hairdressers.īusiness owners who over-deduct business-related expenses-such as car and entertainment-came in a distant second on the cheaters hit parade. A government study found the most underreporting of income was by self-employed restaurateurs, clothing store owners, and-you’ll no doubt be shocked-car dealers. ![]() This is called tax evasion-the most commonly charged tax crime. Most cheating is from deliberate-actual or willful-underreporting of income. Cash-intensive businesses and service providers, from self-employed handy-people to doctors, are the worst offenders. Most of the rest of the cheating is done by businesses. ![]() Hire the best tax and/or criminal lawyer you can find.Īccording to the IRS, 75% of the tax cheating is done by individuals-mostly middle-income earners. Nevertheless, if you are in the unlucky minority of people criminally investigated by the IRS, you need more than this book. The point is that the statistical likelihood of your being convicted of a tax crime is almost nil.
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