Tax Fraud Essay
may not be involved in the activities or is actually involved in the activities themselves. An example of this assistance is when the person helps procures materials that are smuggled and taxes have not been paid on them. This could happen when the raw materials used are imported, or are stolen.
Fraudulent bonds, permits and entries Bonds are like insurance. These are promises or declarations that in case of non-performance the bond shall be taken by the beneficiaries. In the tax of tax fraud the bond referred to here are actually non-existent and are never enforceable in the tax authorities decide to exercise the right to take the bond such as failure to pay an installment on a tax deficiency or tax return. Another criminal offense is the declaration that there are already permits that the taxpayer has procured from the local government and the cost of such permits is deducted in the income tax return as an …show more content…
allowable deduction. When this happens it means that the taxpayer would pay lower taxes than the correct tax. Fraudulent entries would refer to the entries made by the taxpayer on his/her income tax returns. These are fraudulent because such entries are not true a never happened or the amount is overstated in the case of an expense. Another example of a fraudulent entry is when the taxpayer declares in the tax return that cost of the materials used in the production of a taxable goods are much more than the truth and there are no documents to support these.
Connivance with another person is under this provision of fraudulent entry or records.
Removal or concealment with intent to defraud Removal or concealment is another act to defraud. This happens when the taxpayer does not declare in full all the sources of revenues that are taxable. This is an act of under declaration of revenues. One example of this act is the non-declaration of a short term contract where the taxpayer receives a fee for the services. When this fee is not declared among the revenues in the return then there is in effect concealment with intent to defraud. An example of this act is cases where the taxpayer goes abroad in order to do a contract of services as a professional and receives a fee for the services. When the fee is not included among the taxable revenues then there is concealment of the revenue. Another example is when the taxpayer sales a piece of property and realizes a gain in the sale but the taxpayer does not declare the true amount of the selling price. Thus there is concealment.
Compromises and closing
agreements Compromises are another fraudulent act. This is because by entering into a compromise the taxpayer enters into a punishable offense. An example of this is an act where the taxpayer signs an agreement on the sale of the taxpayer’s property and realizes a gain. However, the deed of sales that is agreed upon and declared in the tax return is an entirely different selling price where the taxpayer does not realize a gain. In effect there is a side agreement which is the true one but the agreement that is used in the return is the agreement with a lower selling price. In effect the taxpayer shows no taxable gain on the sale.
Concealment of property This is in connection with compromises and closing agreements. In this case the taxpayer builds a building but does not declare that who is the true owner. In truth and in fact the building is leased out by the taxpayer and all the proceeds on rentals are not included in tax return. Thus there is an understatement of taxable revenues. An example of property is in the case of stock investments. When a taxpayer buys shares of stocks as investment the property is not included the balance sheet or any other record. When the price of the stock increases the taxpayer then decides to sell the shares of stocks and realizes a gain on the sale. Since the shares of stocks are not included in the investment account of the taxpayer in the balance sheet that it submits to the internal revenue service (IRS) then the sale is during concealed! It is difficult to discover this type of activity because there are several shares of stocks that traded in the stock exchange and the sale is only one of several sales for the day. A good example is shares of stocks of new mining companies that have newly discovered mineral deposits.
Withholding, falsifying, and destroying records Destroying documents which are inimical to the taxpayer when examined by a tax examiner is another fraudulent act. This is the same as withholding information or the existence of a record that would show the true value of a sale, etc.
Conclusion It is normal for an individual to minimize tax payments. This is because tax payments reduce the disposable income of the taxpayer. Therefore, the taxpayer would as much as possible try all the means within his/her capability to come up with a lower tax liability. There are tax consultants who are very knowledgeable on the loopholes in the Code. These consultants would advise the taxpayer client to take advantage of them and thereby reduce tax liabilities. This kind of act is not a felony because there is no provision in law that is violated. One type of revenue that is concealed is gambling gains. These are actually taxable if only the taxpayer is honest enough to declare. Seldom if at all would gamblers in a poker game or in roulette would are gambling winnings declared as taxable revenues. When the law does not clearly provide that there is a rate of tax on gambling gains then the taxpayer could go scot free. One of the methods used by taxpayers is to deposit their funds in a tax haven country where the country does not tax revenues. However, for a citizen of the United States it is required that all sources of income are taxable regardless of where these are earned. An example of a tax haven is countries that are found in Central America like Cayman Island. I think there is also one in England which is called Island of Man. Geneva may not be a tax has, per se, but it does not provide information on the bank accounts of taxpayer. Hence, the Internal Revenue Services has no way of getting such information that is concealed by the taxpayer. (Criminal Failure to File Tax Returns) This is the reason why the legislative body and the executive arm of government particularly the Internal Revenue Service should work hand in hand in order to plug the loopholes in the tax law and to amend the law to include other types of income that are taxable.
Fraudulent bonds, permits and entries Bonds are like insurance. These are promises or declarations that in case of non-performance the bond shall be taken by the beneficiaries. In the tax of tax fraud the bond referred to here are actually non-existent and are never enforceable in the tax authorities decide to exercise the right to take the bond such as failure to pay an installment on a tax deficiency or tax return. Another criminal offense is the declaration that there are already permits that the taxpayer has procured from the local government and the cost of such permits is deducted in the income tax return as an …show more content…
allowable deduction. When this happens it means that the taxpayer would pay lower taxes than the correct tax. Fraudulent entries would refer to the entries made by the taxpayer on his/her income tax returns. These are fraudulent because such entries are not true a never happened or the amount is overstated in the case of an expense. Another example of a fraudulent entry is when the taxpayer declares in the tax return that cost of the materials used in the production of a taxable goods are much more than the truth and there are no documents to support these.
Connivance with another person is under this provision of fraudulent entry or records.
Removal or concealment with intent to defraud Removal or concealment is another act to defraud. This happens when the taxpayer does not declare in full all the sources of revenues that are taxable. This is an act of under declaration of revenues. One example of this act is the non-declaration of a short term contract where the taxpayer receives a fee for the services. When this fee is not declared among the revenues in the return then there is in effect concealment with intent to defraud. An example of this act is cases where the taxpayer goes abroad in order to do a contract of services as a professional and receives a fee for the services. When the fee is not included among the taxable revenues then there is concealment of the revenue. Another example is when the taxpayer sales a piece of property and realizes a gain in the sale but the taxpayer does not declare the true amount of the selling price. Thus there is concealment.
Compromises and closing
agreements Compromises are another fraudulent act. This is because by entering into a compromise the taxpayer enters into a punishable offense. An example of this is an act where the taxpayer signs an agreement on the sale of the taxpayer’s property and realizes a gain. However, the deed of sales that is agreed upon and declared in the tax return is an entirely different selling price where the taxpayer does not realize a gain. In effect there is a side agreement which is the true one but the agreement that is used in the return is the agreement with a lower selling price. In effect the taxpayer shows no taxable gain on the sale.
Concealment of property This is in connection with compromises and closing agreements. In this case the taxpayer builds a building but does not declare that who is the true owner. In truth and in fact the building is leased out by the taxpayer and all the proceeds on rentals are not included in tax return. Thus there is an understatement of taxable revenues. An example of property is in the case of stock investments. When a taxpayer buys shares of stocks as investment the property is not included the balance sheet or any other record. When the price of the stock increases the taxpayer then decides to sell the shares of stocks and realizes a gain on the sale. Since the shares of stocks are not included in the investment account of the taxpayer in the balance sheet that it submits to the internal revenue service (IRS) then the sale is during concealed! It is difficult to discover this type of activity because there are several shares of stocks that traded in the stock exchange and the sale is only one of several sales for the day. A good example is shares of stocks of new mining companies that have newly discovered mineral deposits.
Withholding, falsifying, and destroying records Destroying documents which are inimical to the taxpayer when examined by a tax examiner is another fraudulent act. This is the same as withholding information or the existence of a record that would show the true value of a sale, etc.
Conclusion It is normal for an individual to minimize tax payments. This is because tax payments reduce the disposable income of the taxpayer. Therefore, the taxpayer would as much as possible try all the means within his/her capability to come up with a lower tax liability. There are tax consultants who are very knowledgeable on the loopholes in the Code. These consultants would advise the taxpayer client to take advantage of them and thereby reduce tax liabilities. This kind of act is not a felony because there is no provision in law that is violated. One type of revenue that is concealed is gambling gains. These are actually taxable if only the taxpayer is honest enough to declare. Seldom if at all would gamblers in a poker game or in roulette would are gambling winnings declared as taxable revenues. When the law does not clearly provide that there is a rate of tax on gambling gains then the taxpayer could go scot free. One of the methods used by taxpayers is to deposit their funds in a tax haven country where the country does not tax revenues. However, for a citizen of the United States it is required that all sources of income are taxable regardless of where these are earned. An example of a tax haven is countries that are found in Central America like Cayman Island. I think there is also one in England which is called Island of Man. Geneva may not be a tax has, per se, but it does not provide information on the bank accounts of taxpayer. Hence, the Internal Revenue Services has no way of getting such information that is concealed by the taxpayer. (Criminal Failure to File Tax Returns) This is the reason why the legislative body and the executive arm of government particularly the Internal Revenue Service should work hand in hand in order to plug the loopholes in the tax law and to amend the law to include other types of income that are taxable.