The end of January begins the tax season for 2018 returns, and it could be an extraordinarily confusing year. The new tax laws go into effect for this tax year, and with all of the changes, you may find it a challenge to get things right.
If you do make mistakes, the IRS could somehow think that you intended to commit tax fraud. Believe it or not, seemingly simple oversights could cause the agency to initiate an investigation for just such a crime.
What actions could constitute tax fraud?
Numerous ways to commit tax fraud exist, but the ones below are those the IRS tends to commonly view as fraudulent:
- If you fail to file tax returns even though the IRS contacted you previously instructing you to file
- If the IRS believes you deliberately failed to report all your income
- If the IRS believes you lied under oath
- If you took cash payments that you failed to deposit as a tax avoidance strategy
- If you simply decide not to file a return even though you earned significant income during the tax year
- If the IRS believes you inflated your business expenses
- If the IRS believes you claimed more charitable deductions than you can prove you made
- If the IRS believes you created business expenses you don't have
- If the IRS thinks you reported your personal expenses as business ones
- If the IRS believes you transferred assets in order to hide them
- If you improperly entered your Social Security number
- If the IRS thinks you concealed financial accounts
- If you have two sets of records for your business
- If the IRS accuses you of creating receipts and deposits for deductions
- If the IRS accuses you of saying your accounts are not income but the agency believes they are
- If you claim a spousal exemption as an unmarried person
- If the IRS claims you destroyed records to hide tax evasion
- If you claim a dependent exemption without supporting the individual
Again, this list does not include all of the ways the IRS could accuse you of tax fraud. Many of the mistakes individuals make on their tax returns are due to lack of knowledge of the rules, which often confuse many people. If you find yourself under investigation for tax fraud, it would greatly benefit you to take steps to protect your rights as quickly as possible. This white-collar crime comes with harsh penalties should a conviction occur, and you would do well to take any charges seriously.