What you need to know about tax fraud

An accusation of tax fraud is not something you should take lightly. In order to respond correctly to such an accusation, you have to understand what tax fraud is all about.

What constitutes tax fraud?

The government expects all US citizens to voluntarily and correctly pay their taxes. One example of tax fraud occurs when you intentionally fake or withhold information on your tax returns in order to reduce the amount of taxes you must pay. Additional examples of tax fraud include:

• Non-submission of income tax returns 
• Filing fake tax returns
• Misreporting income or expenses

In some cases, tax fraud may occur alongside other white-collar crimes, such as securing fraudulent loans.

Simply missing your tax obligations does not mean the government will automatically accuse you of fraud. Authorities may recognize inconsistencies in your tax returns as honest mistakes, although you may still incur penalties because of these errors.

What are the possible consequences?

Like other types of crime, tax fraud comes with varying ramifications that depend on the severity of the offense, including fines and several years of jail time. Conviction may also damage your reputation and can make it harder to find jobs or earn the trust of businesses and customers. For these reasons, you must respond appropriately to any accusation of tax fraud.

What are common defenses to these allegations?

It is important to keep records to help build a defense to these allegations. Check for copies of receipts and other documents that can serve as evidence of compliance. Other defenses are possible and depend on the details of the allegations.