Right after each New Year brings in yet another tax season, quite a few Americans begin preparing reason for post-holiday celebrations by making false representations on their tax returns with sweet anticipations of a huge refund. However, this misguided ‘cheating taxes is ok’ mentality can backfire with long-term consequences that cost far more heartache and pain than any sum of instant ‘gain.’
And although our law firm does not provide a tax fraud defense attorney, we can’t help but stress the importance of filling taxes according to the law.
• Lying on taxes about health insurance
For example, Jane Doe is self-employed and buys first-time coverage in January with premium credit applied based on estimated gross income of $25,000 for CY 2015. However, Jane’s business was bad for a year and grossed only $11,000 during CY 2015. Per IRS rules, she’s not entitled to any ACA tax credit because her actual gross 2015 income fell below the federal poverty level.
• Lying on taxes about school
For instance, John and Jane Smith are divorced and have a daughter who attended college full-time during 2015. Both parents may decide to claim LLC for daughter Susie’s educational costs on their 2015, despite neither or both having actually paid a penny toward their child’s higher learning expenses.
On February 15, 2016, an L.A. Times prominent headline featured details about very recently launched full-scale FBI investigation in response to a rash of fraudulent online tax return preparation via the popular Turbo Tax platform. Reportedly, ID thieves obtain large refunds by preparing returns submitted in victims’ names who remain unaware of the situation until their own legitimately prepared returns get auto-rejected by IRS computers as duplicate submissions for that same tax filing period. Innocent taxpayers in at least 19 states are known to have been victimized by the online tax fraud scam as of date.
Filing a fraudulent return or making false statements knowingly and willfully can be punishable by up to 3 years of imprisonment. There can also be a $500,000 fine and full prosecution costs for tax fraud of $100,000 or more. Even in ‘small claims’ IRS tax fraud cases, a defendant faces stiff monetary penalties of up to 100 percent of unpaid taxes or $5,000.
Lying on your taxes could create a permanent fraud notation placed on your record that will likely trigger perpetual audits for even perfectly honest tax returns. Loss of personal reputation and employment are essentially pro forma.
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