Tax evasion – a worldwide sophisticated phenomenon

Tax evasion is usually understood to be an act in which an individual intentionally chooses to not pay income taxes due. This act of not paying taxes may be conducted by simply chooses to not file an income tax return, or choosing to not include information about taxable income on the filed return. In all instances, tax evasion can be considered to be fraud, and usually carries stiff penalties.

While there are some that consider any type of omission from the tax return to constitute tax evasion, it is important to remember that it is possible to omit an item simply because the data was overlooked when filing the return. Thus, the intent of the individual plays a key role in determining if tax evasion has taken place. When the return fails to include information simply because the filer overlooked the data, there is a good chance that the tax agency will still impose a fine of some sort, but no further action would be taken.

However, when it can be demonstrated that the individual willfully attempted to hide information about income that was subject to withholding, the tax agency may choose to impose more than a simple interest fine on the amount omitted. The filer may be subject to stiff fines associated with the deliberate failure to file an accurate tax return, or even possibly face prosecution and some time spent in jail for the intentional negligence.

Tax evasion is considered a crime, and is often classified as fraud. All citizens suffer from tax evasion, as the act prevents the government from collecting funds to use for the operation of essential services to the population. When these funds are not collected, services have to be curtailed and thus result in a lower quality of life for all citizens.

Persons who become aware of an error on calculating taxes on reported income or notice that income was inadvertently left off the tax return for a given period should contact the tax agency and make arrangements to file an amended return as soon as possible. This will help to minimize the chances of being suspected of tax evasion, and allow the matter to be settled before interest charges become significant.

Criminal Tax Evasion

Moving funds suspiciously and with no clear reason or documentation can attract the attention of tax authorities. Once tax authorities suspect someone of tax evasion, they will scrutinize that taxpayer closely. Notable members of the criminal community, including no less a figure than infamous gangster Al Capone, have gotten in trouble for tax evasion.

In order to become a tax inspector you must have excellent accounting and research skills. Tax inspectors must review tax returns in order to find tax evasion or mistakes. In order to begin a career related to taxes, you must study tax codes, have a sharp understanding of mathematics and be able to work with people.

Convicted Tax Evasion

For example, a ten-year statute of limitation on tax debt means that a person cannot be charged with tax evasion more than ten years after the occurrence. Warrants, however, do not have a statute of limitations.

Tax Evasion Investigation

In order to become a tax inspector you must have excellent accounting and research skills. Tax inspectors must review tax returns in order to find tax evasion or mistakes. In order to begin a career related to taxes, you must study tax codes, have a sharp understanding of mathematics and be able to work with people.

Referred to as tribunals, these are essentially situations in which a person is prosecuted for tax evasion. The inspector may present evidence he uncovered that led to the charge of tax evasion.

Bank deposit cash expenditure method

The bank deposit cash expenditure method identifies tax evasion through review of the taxpayer’s bank deposits. This method of investigation primarily focuses on whether the taxpayer’s total bank deposits throughout the year are equal to the taxpayer’s reported income. This method is most appropriate when the majority of the taxpayer’s income is deposited in the bank and most expenses are paid by check. This method is most commonly used for surveillance of tipped employees and is combined with statistical analysis to determine what a tipped employees actual wages are. Information gathered through this method is most successful when the credibility of tipped employees can be destroyed. This method is used less frequently now for tipped employees because the IRS negotiates with hotels or casinos, the largest employers of tipped employees, to identify a tip estimate. If the tipped employee reports the minimal amount agreed upon, he is not questioned by the IRS. However, it is recommended for corroborating other methods of proof. Given the uncertainty of this method, this method likely could not be used in criminal prosecutions where the guilt must be found beyond a reasonable doubt.

Whistle blower Program

This is a program which allows anonymous whistle blowers may receive certain percent of any recovery including all penalties, interests and any other monies collected from the government. The whistle blower program seeks information based on evidence and analysis which can provide a solid basis for further investigation rather than speculation and hearsay. The program is designed to provide incentive to ordinary citizens to snitch on tax cheats. The program provides far greater incentives for whistle blowers than previous programs because under prior programs the government was not required to compensate whistleblowers. Under this program, a taxpayer may file in court if they are not issued a deserved award.

What is Tax Fraud?

Taxes are monies that individuals and businesses owe to governments. These amounts are usually obligatory, unless some type of exemption applies. Tax fraud occurs when an individual or business aims to cheat the government out of all or part of what is owed. People do this by keeping false records, underreporting tips or cash income, and concealing assets.

There are numerous types of taxes, including income tax and sales tax. There are also numerous governments to which taxes may be owed. These include county, state, and federal governments.

There are many methods people can use to commit tax fraud. With regard to income taxes, people may lie about how much they have earned. By claiming to have earned less on a tax return than a person actually earned, he can fraudulently lower his tax burden.

Tax fraud can also be committed in regards to other types of taxes. Counties, for example, often charge tax on personal property. To reduce the amounts owed, a person may try to conceal valuable items or illegally transfer them to avoid paying the correct amount of taxes. An individual or business does not have to be directly involved in the fraudulent actions to be accused of tax fraud. The party who owes taxes may be held liable for the acts of third parties such as accountants and lawyers.

Tax fraud can be handled as a civil matter. In these instances, a guilty party is generally ordered to pay the amounts due plus penalties and fines. Some or all of his assets may be seized to compensate the government he owes. Sometimes, however, tax fraud is pursued as a criminal matter. In these instances, a person can be ordered to pay criminal fines and may be incarcerated.