Tax Fraud Alerts: Tax Evasion and Tax Avoidance

Last updated on July 11, 2022

There are multiple ways in which tax frauds tempt and trap taxpayers to cheat them out of their money, such as convincing taxpayers to become a party in conducting illegal financial activities, trapping them into paying heavy fees for legal or illegal gains, and indulging in forgery to extract money from them without their knowledge.

Tax Fraud: Tax Avoidance of Anti-Tax Advocates

Many believe the income tax system is unfair, but some use this argument to evade taxes. When this belief leads to non-compliance, the IRS takes corrective action. Courts have many times rejected such arguments as frivolous.

To avoid becoming a victim to such claims, taxpayers can research tax laws and IRS rules. The IRS also provides information about frivolous tax arguments on their website. Before taking a serious step such as avoiding paying taxes, information about its possible outcomes must be obtained.

Tax Fraud: Tax Evasion through Attractive Schemes

Any scheme that involves the hiding assets and/or income to evade taxes only leads to complications with the IRS. A scheme is abusive when it offers taxpayers benefits if they use illegal methods. Many times, fraudsters dupe taxpayers into believing a scheme is legitimate when it is not. Before being a part of any tax scheme, taxpayers are advised to get a second opinion by a professional.

When an offer sounds too good to be true, it often is. Offers designed to attract taxpayers to invest their money into schemes do not provide what they promise or protect the taxpayer. Many schemes use offshore banking, or establish scam corporations or entities to cheat taxpayers and the government.

Punishment for Tax Fraud

Tax avoidance and tax evasion are both punishable under law. Participating in fraudulent tax schemes, intentionally or otherwise, can result in imprisonment and penalties. It includes payment of the evaded taxes with interest and penalties.

Taxpayers must keep them informed about the legal methods of investing and saving taxes. They may subscribe to IRS alerts and recheck all tax information to check its authenticity.