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Common Forms Of Tax Fraud The IRS Searches For

On Behalf of | Aug 26, 2018 | Felonies, Firm News

With how detrimental taxes can be to businesses and personal finance plans, many Minnesota businessmen try to use various tactics to pay less than what they owe or avoid taxes all together. These strategies do not go unnoticed by the IRS, who have dealt with numerous techniques over the years to recognize when someone is holding back payments.

It is important to be aware of what methods can provoke the IRS into prosecuting you for tax fraud to avoid the harsh punishments could come with a conviction.

Under-reporting income

Arguably one of the most popular tactics business owners use is to say that their income is lower than what it actually is. This means they receive lower tax rates along with keeping the separate amount that they did not file on the report. An example of this can be found in the recent arrest of a restaurant owner in St. Louis Park, who under-reported his taxes by $118,138 for over 3 years. The owner was already well-known within the Minnesota Department of Revenue for his history of not filing tax returns, showing how closely the state and IRS keeps an eye on suspicious activity.

Two sets of books

Some businessmen have two sets of accounting records to try to hide or lower their income on tax returns. While it is not illegal to have two sets of books to manage your finances, the IRS may keep a closer eye on you if you do. The Minnesota Department of Revenue states that common signs of employers using the two books irresponsibly include refusing to have others manage the account or repeatedly opening and closing new businesses.

Nonexistent dependents exemptions

Some Minnesotans try to lower taxes by filing dependent exemptions on children they do not have. In 2018, you can get a $4,050 exemption for each qualifying child you file on the report. With the effort it takes to make it look like you have children, you could be facing multiple charges alongside the tax fraud. You would also have to create a fake social security number for the fictional child, which is another common tax fraud tactic that the IRS looks for.

If you face convictions for tax fraud, you could be receiving multiple years in jail time and potentially over $100,000 in expenses. The prosecution has to prove that you committed these actions intentionally for you to be charged, so it is important to seek the professional assistance of a criminal defense attorney to avoid a conviction that would be highly detrimental to your business and personal life.