When it comes to your taxes, either for yourself or your business, there is nothing more important than being 100 percent honest and accurate at all times. If you begin to bend the rules, if you think you can hide from the IRS, you could be in trouble at some point in the future.
Tax auditors know what fraudulent activity looks like. They are skilled and experienced in this area, knowing what it takes to catch people who are attempting to defraud the system.
Some of the suspicious activity tax auditors look for include:
— Falsification of tax documents.
— Overstatement of exemptions and deductions.
— Keeping two sets of books.
— Using another person’s Social Security number.
— Willfully underreporting income.
— Claiming an exemption for a dependent that does not exist.
— Claiming personal expenses as business expenses.
These types of activities can quickly land you in trouble with the IRS. Even if you get away with something a few times, it could come back to bite you when you least expect it.
The IRS has a difficult job, as they receive millions upon millions of individual and business tax returns every year. For this reason, it is only natural for mistakes to happen. There are times when they overlook fraudulent activity. There are also times when they accuse somebody of a crime they did not commit. As a taxpayer, you should fully understand how the IRS works, what they expect from you, and what to do if they audit your return or ask questions.
Source: FindLaw, “Income Tax: Fraud vs. Negligence,” accessed Feb. 04, 2016