Crime Really Causes People to Pay - A Lot, Part 2




         While the vast majority of Taxpayer’s are honest and give all the necessary factual information when it comes to their Tax Returns, there are a few who do not. They see opportunities to use Credits falsely and increase fraudulent expenses and deductions. While they may gain in the short-term, the IRS looks at a bigger picture.
          There is a list of typical tax scams that the government is always looking out for. Their systems are checking the past 3 years’ worth of Tax Returns for these trends and will start an audit if something looks suspicious. They will add more years of tax filings if more errors are found. The penalties that can be applied are fairly severe.
          If it is determined that the Tax Return is “frivolous” or “contains information clearly showing that the tax reported is incorrect”, the fine from this determination is $5,000. That would be added to the Tax that is still owed. If this is the result of Tax Fraud, a separate percentage penalty would be added. Criminal prosecution and jail time could result from these actions. It would seem that the best defense against an audit is to file an honest Tax Return.

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