Tax fraud occurs when a person seeks to avoid paying taxes. This is generally accomplished by underreporting income, or overembellishing expenses or deductions.

What is Tax Fraud?

As provided by the IRS:

“Fraud is deception by misrepresentation of material facts, or silence when good faith requires expression, which results in material damage to one who relies on it and has the right to rely on it.”

Simply stated, it is obtaining something of value from someone else through deceit.

What Happens if you Commit Tax Fraud?

It depends. If you get away with it, good for you. If not, you can be subject to various fines and penalties. The penalties can be civil or criminal.

Is Tax Fraud a Federal Offense?

Yes, tax fraud is a federal offense. While tax fraud can also be a state crime, it is a federal offense.

Can the IRS Put Me in Jail?

No, BUT they can refer you for a criminal investigation, which can lead to a criminal prosecution, which (if convicted) can lead to a jail or prison sentence.

What Happens if You Lie to the IRS?

If you lie to the IRS, you may receive criminal or civil fines and penalties.

Why is the IRS So Strict About Tax Fraud?

The answer is relatively simple: Tax Fraud is a very serious violation in the eyes of the IRS. With Tax Fraud, a person is essentially trying to pull the wool over the IRS’ eyes by tricking the US government – typically either by reducing income or falsifying deductions – in order to artificially reduce their tax liability.

While in general, the IRS seems to take every little thing way too seriously, when it comes to Civil Tax Fraud, there is a higher level of scrutiny against any individual the IRS believes committed Tax Fraud.

Therefore, the statute is written to provide the government with as much time as the government may need in order to go back and try to uncover the nucleus of facts leading to the fraud.

Tax Fraud Statute of Limitations
Tax Fraud Statute of Limitations: There are many different statutes that comprise the Internal Revenue Code. The Tax Fraud Statute of Limitations is different from other statutes. The IRS basically has unlimited time to audit you for civil fraud. The criminal statute is different, but we will focus on civil enforcement. In recent years, the Internal Revenue Service has directed its fraud enforcement towards aggressively pursuing foreign accounts compliance — but the government has not forgotten about domestic enforcement either. The fraudulent non-reporting of U.S. Income, offshore accounts, assets, investments, and income may lead to severe penalties, such as FBAR Penalties. These penalties can be reduced and sometimes even avoided with voluntary disclosure. Let’s review the basics of the Tax Fraud Statute of Limitations.

Nguyen Kinh Doanh.

Contact author: doanh@dslextreme.com.