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Protecting yourself against charges of tax fraud

On Behalf of | Nov 2, 2023 | Tax Controversies |

Tax season can be a stressful time, but you must still ensure that you accurately report your income and expenses. Otherwise, you run the serious risk of facing tax fraud charges and the harsh consequences that come with them.

Tax fraud can lead to hefty fines, penalties and even imprisonment, but there are steps you can take to protect yourself. Not only should you understand how to avoid fraud charges in the first place but you should also know your options for fighting accusations placed against you.

Be diligent in record-keeping

Maintaining meticulous records of your financial transactions is a fundamental way to safeguard yourself against potential accusations of tax fraud. Keep all receipts, invoices and financial documents organized and easily accessible. Accurate records can provide a solid defense in case of an audit or investigation.

Report all income

One of the common triggers for tax fraud allegations is failing to report all sources of income. Ensure that you report all earnings, including wages, investment income, freelance work and any other sources. The IRS has access to various income reporting systems, so honesty is a must.

File your taxes on time

Late or unfiled returns can draw the attention of tax authorities, increasing the risk of an audit or investigation. Keep track of important tax deadlines and file promptly to stay on the right side of the law.

Be transparent during an audit

If you find yourself subject to a tax audit, be sure to cooperate fully. Provide all requested documentation, answer questions truthfully and be forthcoming with any additional information required. This transparency can demonstrate your intent to comply with tax laws.

Seek professional guidance

Navigating the complexities of the tax code can be challenging, and it is easy to make unintentional errors. To ensure you are following tax laws correctly, consider consulting a tax professional or a certified public accountant. They can offer guidance, help you claim legitimate deductions, and provide peace of mind.

The IRS conducted more than 2,550 criminal investigations in 2022, identifying more than $31 billion from tax and financial crimes. This large number of investigations shows how serious the IRS is about fraud, but it can also give you hope in knowing that there are processes in place for you to defend yourself against accusations of fraud.