Tax Fraud Explained

Tax fraud is a serious crime in the United States and other nations as it poses a threat to the national infrastructure, the national economy and the global economy. Many government agencies and public services operate through the funds provided by taxes as they are filed annually. However, when someone commits tax fraud, or tax evasion.

The tax returns that people file every year contain several sections that require the taxpayer to note their annual income as well as possible tax deductions that he or she may receive depending the appropriations of that income during the year. People who commit tax fraud often alter the information that they provide on that form in order to mislead the Internal Revenue Service. By doing so, they hope to be taxed less and receive a higher tax return from the government. Again, people who commit tax evasion often do not file a return.

There are several methods that are commonly used by those who commit tax fraud.

Falsifying financial records - By falsifying financial records, a person may alter the amount of income they receive annually by making it appear that they earn less in order to be taxed less.

Reporting personal expenses as business expenses - By reporting personal expenses as business expenses a person is hoping to be taxed differently by the government. For example, a household is taxed differently from a small business. By posing personal expenses as business expenses that person may receive more deductions and be taxed less.