A Prominent Criminal Defense Firm Serving Dallas, Fort Worth and North Texas

Are you committing tax fraud without knowing it?

On Behalf of | Jul 3, 2024 | Criminal Defense

Paying proper taxes is crucial for maintaining the infrastructure and public services such as schools, roads, healthcare, and public safety. Ensuring you pay the correct amount helps keep these essential services running smoothly. However, many people might be committing tax fraud without even realizing it.

Underreporting income

Not reporting all sources of income, such as freelance work or rental income, may fall under tax fraud. Ensure you include all income sources on your tax return.

Improperly claiming deductions

Tax fraud can result from claiming deductions you do not have entitlement to. This includes excessive business expenses or charitable contributions. Always keep accurate records and receipts to support your claims.

Failing to report cash transactions

You may be committing tax fraud if you receive cash payments for goods or services and do not report them. You must report all income, including cash, to the Internal Revenue Service (IRS).

Misclassifying employees as independent contractors

You could be committing tax fraud if you own a business and classify employees as independent contractors to avoid paying payroll taxes. Ensure that worker classifications comply with IRS guidelines.

Using a false Social Security Number

Using someone else’s or a fabricated Social Security number to file taxes can have serious legal consequences. Always use your correct Social Security number.

What are the penalties for tax fraud?

Committing tax fraud can result in severe penalties. The IRS may impose civil penalties of a certain percent of the unpaid tax and interest and potential imprisonment. If facing criminal charges, it may lead to felony convictions, with potential prison sentences of up to five years and a fine of up to $100,000 for individuals and $500,000 for corporations. 

With the proper legal guidance and corrective actions, you can navigate the complexities of tax law and significantly improve your chances of resolving tax disputes.