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4 types of tax fraud that lead to potential jail time

On Behalf of | Sep 25, 2023 | Criminal/Civil Tax Litigation |

Tax evasion is a serious crime that can have severe consequences for those who attempt to evade their tax obligations.

While the Internal Revenue Service is responsible for collecting taxes, they also have a keen eye for identifying tax fraud. If convicted, individuals may find themselves facing jail time.

1. Concealing offshore accounts

Concealing assets in offshore bank accounts to avoid paying taxes is a common form of tax evasion. Many individuals believe that hiding money abroad will shield it from taxation, but international tax agreements have made it increasingly difficult to keep such accounts hidden. In 2022, IRS agents identified more than $31 billion from tax and financial crimes.

2. Falsifying deductions

Claiming false deductions on tax returns is a form of tax evasion that can also result in jail time. Some taxpayers attempt to exaggerate deductions for expenses they did not actually incur, such as inflating charitable contributions or business expenses. The IRS closely scrutinizes deductions. If they find evidence of fraudulent claims, individuals may face prosecution for tax evasion.

3. Identity theft and tax refund fraud

Some individuals engage in identity theft and tax refund fraud by filing false tax returns using stolen personal information. This criminal activity can lead to substantial financial losses for the victim and serious legal consequences for the perpetrator.

4. Failure to pay taxes

While it is necessary to file tax returns accurately, it is equally important to pay the amount owed in full and on time. Failure to do so can result in penalties and interest. If the debt remains unpaid, it may lead to criminal charges.

Tax evasion is not a crime to take lightly. Engaging in fraudulent activities to avoid paying taxes can lead to severe consequences, including the risk of incarceration.