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Type of IRS Tax Fraud

Tax fraud is the willful violation of one’s legal responsibility to pay mandatory taxes to the government in order to secure unfair or unlawful gains. Tax fraud has become increasingly more complicated, and below is a basic list of just some of the common types:

  • Off shore accounts fraud
  • Corporate tax fraud
  • Employment tax fraud
  • Money laundering tax fraud
  • Abusive Tax Shelters
  • Filing False or Misleading Forms
  • Return Preparer Fraud
  • Disguised Corporate Ownership

It is also important to note the distinction between Tax Fraud and Tax Underpayment. Under the IRS Tax Whistleblower Program, whistleblowers may be eligible for rewards for any form of tax underpayment, whether it is the result of fraud, reckless disregard, innocent mistake, or some other level of intent. Sophisticated taxpayers often take overly aggressive positions on their tax returns in the hope that the IRS will not challenge their tax position. While many of these overaggressive positions are not fraudulent, they often result in large-scale underpayment of taxes. There are a variety of actions, which indicate a clear intention to willfully underpay required taxes. They may include:

  • Failure to file a tax return
  • Deliberately under-reporting or omitting income
  • Claiming false deductions
  • Hiding or transferring assets or income
  • Overstating the amount of deductions
  • Making false entries in records
  • Failing to report income earned in a stock exchange
  • Maintaining two sets of books
  • Misusing trusts
  • Abusing charitable deductions