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What if I’m accused of tax fraud?

| Mar 1, 2021 | Tax Controversies |

Any time the IRS contacts you about a tax dispute is nerve wracking. But if the IRS accuses you of tax fraud, your anxiety likely escalates significantly. The penalties for committing tax fraud are very stiff. Those found guilty of tax fraud may have to pay fines of up to $250,000 ($500,000 for corporations) or may have to serve up to three years in jail.

Tax fraud vs. negligence

The IRS doesn’t accuse taxpayers who make simple mistakes on their tax returns with fraud. To be guilty of fraud, someone has to:

  • Intentionally not file a tax return
  • Willfully fail to pay their due taxes
  • Intentionally fail to report all their received income
  • Make fraudulent or false claims
  • Prepare of file a false tax return

Signs of tax fraud

The IRS looks for specific signs when investigating tax fraud. Some of these include the following:

  • Overstating deductions and exemptions
  • Falsifying personal or business expenses
  • Falsifying documents
  • Claiming an exemption for a nonexistent dependent, such as a child
  • Willfully underreporting income
  • Keeping two sets of financial ledgers

Getting help when accused of tax fraud

When you discover you are under investigation for tax fraud, you want to consult with an experienced tax law attorney as soon as possible. You want someone who understands the complexities of tax law to help you, to prepare a defense any fraud allegations you may face. You need to take any IRS investigation of your taxes seriously and get help to preserve your rights.