Avoiding Tax Fraud
There are many individuals and companies who think they can get around the legalities
of paying taxes, but the truth of the matter is that everyone who has an income has to pay taxes in the United States.
There are often television specials, books, and seminars about people who haven't paid taxes in years,and they claim to have not gotten into any trouble with the law because paying taxes aren't mandatory.
They claim the IRS is simply trying to cheat you out of your own money by making you believe you have to pay a certain percentage of your income.
Though their principle of claiming that the government charges taxes on things that should not be taxed is a valiant effort, you should not believe that you can get away with neglecting your responsibility to pay taxes on your income and on your purchases.
Though some things like property tax and the like seem ridiculous because you have already purchased the piece of property once, why would you pay a tax on it every year just for continuing to own it?
Unfortunately, things like that cannot and will not be changed, so when doing you taxes be sure to pay that tax, or you will find yourself discovering a large envelope in the mail from the IRS claiming you owe them a lot of money.
A silly trick individuals try to play is claiming that they did not make as much money in a year as they actually did. They do this because they want to pay a little bit less taxes, and they figure since the IRS has to check everyone's taxes, they won't discover such a small difference on one person's return.
If only that thought process were true, everyone would try to claim a few hundred dollars less on their income. But it is not true, because the IRS has thousands of employees whose job is to spot out your mistakes.
When the IRS is checking your taxes, they aren't just looking for the figures that make up your income and deductibles, they are checking to see who you received money from and who you gave money to.
If you make a home purchase, for example, they look at that number, and then check what bank you lent from to make sure the bank says they gave that same amount of money to you. If the numbers do not match up, they assume someone has purposely lied on their taxes, they discover who made the mistake and you will be taxed for the amount of money that was not collected by the government.
This could mean a lot of trouble for an individual and could cost them thousands of dollars. Another form of fraud is when companies claim they made more money in a period than they actually did. When a company claims they made more money in a period, their value increases because it means more people are buying their products, which subsequently makes their stock increase.
This chain reaction benefits the company, because their net worth increases, and the increase in the stock value pleases investors who will buy even more stock because of the perceived rise of the company. Unfortunately, if the company does not make as much money as they claim, the value of the company on paper is larger than the actual value of the company.
This is a big problem for investors who are putting money into a company that is not worth it. This type of corporate fraud will not only mean a large fine for the company, and stocks will rapidly decrease when exposed to the public.
Unlike individuals who lie on their personal tax returns, in instances of corporate fraud, the share holders suffer from the deceit of the company, and there is nothing they can do to stop or prevent such a thing from happening.
With tax fraud, it does not matter if the mistake was intentional or not, the fact of the matter is that the government wants the exact amount of money owed to them. When filling out tax forms for individuals or for businesses, it is important to be very precise and not leave anything out.
Numerical mistakes are very costly for all individuals involved , that is why being meticulous is key, and if that responsibility is something that you cannot do for your personal return, a tax accountant should be hired, because the fee for their service will be far less costly than a mistake on your tax forms.
by: Jack Landry
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