Examining Tax Fraud and What Can Be Done When Allegations are Made
Accusations of playing fast and loose with tax reporting and return preparation is not something anyone wants to face. Even so, there are individuals and business operations that are dealing with charges of fraud this very minute. Choosing to learn more about tax fraud, what sort of events can lead to allegations, and the kind of penalties that may be imposed is something every taxpayer must understand. Here is some information that will help the individual know if the time has come to seek help from a NYC tax fraud lawyer.
What is Tax Fraud?
Tax fraud involves a conscious decision to falsify tax records and returns. In most cases, the motivation for committing such an act is to avoid paying the rightful amount of taxes due on personal income, business profits, inventories, and other types of financial assets.
It’s important to note that mistakes can be made with accounting records that in turn lead to using incorrect information when filing reports and returns. Tax agencies look upon mistakes that were made with no intent to defraud in a different light. Unless there is solid evidence that actions were taken with the specific desire to reduce the amount of tax owed, obtaining a conviction will be difficult.
How is the Fraud Committed?
Altering reports and returns in order to lower the amount of taxes owed can involve several different strategies. One of the more common approaches it to claim exemptions or deductions that are not legitimate. In this scenario, it’s not unusual for individuals or business owners to create documentation that on the surface seems to confirm that the deduction or exemption is valid. It’s only upon closer examination of bank records and various financial documents that the legitimacy of the exemptions is questioned.
Failing to report income is another approach sometimes used to commit tax fraud. Individuals who are employed full time but also have a side job where they are paid in cash may decide to not include the proceeds from that second source of income. The belief is that without any type of paper trail, it would be difficult for anyone to question the return that is filed using the documentation provided by the primary employer.
Claiming personal expenses as business expenses is also one of the ways that fraud can be committed. An employee who travels for work and is reimbursed for credit card charges and out of pocket expenses as a result has essentially not sustained any type of business expense. Choosing to forget about the reimbursement by the employer and claiming those expenses on a return may lower the amount of taxes owed, but it does constitute fraud.
What are the Penalties for Tax Fraud?
There are civil and criminal penalties associated with a conviction of tax fraud. The type of action taken will depend on the manner in which the attempt to defraud the tax agency was structured.
Choosing to submit statements that are false is considered a felony. It is possible to be sent to prison for up to three years. There is also the chance of being fined. Currently, individuals may be fined as much as $250,000 USD for including false statements in their reporting. Business operations are subject to a much greater fine.
Seeking Help from a NYC Tax Fraud Lawyer
Receiving notice that a tax agency is conducting an investigation and charges of fraud are pending is not something anyone wants to experience. Should such a notification be received, now is the time to engage the services of a NYC tax fraud lawyer.
The lawyer will arrange for professionals to go over all documents submitted to the tax agency as well as evaluate the accuracy of all financial records in the client’s possession. The goal is to determine if there are any signs of an intention to withhold information from the agency or manufacture exemptions or deductions that are not valid.
Should the effort reveal nothing more than errors that appear to be the result of making postings in haste or failing to post an expense to the proper account, the lawyer is in a position to defend the client by pointing out there was no intent to defraud.
Remember that the legal counsel will be present throughout the process. In the best case scenario, it will be possible to confirm that any discrepancies are the result of an honest mistake and not a conscious attempt to commit fraud.
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