If you are a resident of the United States, it is essential that you learn as much as possible about the tax system. This means knowing right from wrong, as this will ensure that you avoid trouble with the IRS in the future.
While there is no denying the fact that basic mistakes occur from time to time, such as making a mistake with a deduction, there are also situations in which a person deliberately commits an act of fraud.
The IRS is always on the lookout for fraudulent activity, as they hope to cut back on this. Not only does this make for a more fair system, but it goes a long way in ensuring the agency receives the proper amount of money.
Here are some of many types of criminal activities that violate tax law:
— Keeping two sets of books.
— Deliberately underreporting income.
— Making false entries.
— Claiming false deductions.
— Claiming personal expenses as a business expense.
— Hiding income or assets that should be taxed.
Generally speaking, the IRS is not out to get people who make basic mistakes on their tax return. Instead, they have their eyes set on people who are taking part in fraudulent activity.
But here is what you need to remember: There is a lot of gray area, meaning that a person could be convicted of fraud when in all actuality he or she only made an honest mistake.
As somebody who is required to pay income tax, you should know your rights in the event that you are charged with tax fraud.
Source: IRS, “Types of Fraudulent Activities – General Fraud,” accessed June 24, 2016