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Acts that constitute tax fraud

On Behalf of The Law Firm of Brent D. Ratchford |

Tax fraud is not a mistake since it’s a willful intention to avoid paying tax. Tax fraud happens to businesses and individuals. Tax evasion is among the common types of tax fraud. In the US, taxpayers file their taxes voluntarily. However, withholding information from the Internal Revenue Service (IRS) is a federal crime. Here are common acts of tax fraud in North Carolina.

Failure to pay income tax

According to the IRS, tax fraud is a white collar crime done by approximately one in every six people. If this data is accurate, there should be an increase in the number of tax-related arrests. However, the IRS identifies the difference between negligence and tax fraud. Since tax fraud is a deliberate venture, here are some characteristics:

  • Intentionally failing to pay tax
  • Failing to file federal tax returns willfully
  • Failing to report income
  • Making fraudulent claims

Some tax codes are complex to decipher. Thus, the IRS often notes that people might make mistakes when filing their returns. When there’s no evidence of fraud, the IRS often makes an assumption that you made a mistake when filing for returns.

Refusing to pay

Most people may persuade you not to pay your taxes, claiming it’s unconstitutional or illegal. However, never file your returns while making unreasonable claims. Over the years, courts are making conditions harsher for people who file return with frivolous arguments.

Employment and payroll tax fraud

Some businesses underreport their workforce numbers and fail to pay them to the IRS. Additionally, a business may decide to pay their workers in cash under the table. This is tax fraud since the company isn’t complying with the federal tax rules.

It’s essential that you properly check every input before filing your tax returns. If you’re a victim of tax fraud, consult an attorney. They might guide you in understanding the basics of tax fraud.