Tax Fraud

Although most fraud is intent on stealing from businesses and individuals. Some frauds such as tax fraud are aimed at governments, indirectly costing honest taxpayers. Tax fraud takes on two forms – frauds aimed at illegally decreasing the amount of tax owed and frauds aimed at claiming undeserved refundable credits. The typical approach is to underreport income or over report expenses. Governments have initiated an array of information sources, such as W-2s, 1099s, and K-1s, to combat income and expense fraud. Social Security numbers and other personal data, combined with huge government computer databases, have helped reduce the fraudulent claims for various refundable tax credits; although the amount of fraudulently claimed credits is still enormous.

Many unsuspecting taxpayers have been taken in by criminals promoting schemes purporting to eliminate taxes by taking advantage of tax havens or "little known" loopholes. The IRS often treats the taxpayers involved in these as criminals even though they may not have known that they were breaking the law. These schemes include:

Hiding income or assets in foreign corporations or trusts that they do not "technically" own.
Receiving non-reportable fringe benefits from foreign corporations controlled by the taxpayer.
Selling gains to offshore entities via private annuities.
U.S. Constitution-based claims that income tax is illegal.
Charitable donation schemes based on inflated appraisals.

Although these schemes are presented as sincere programs with the taxpayer's financial interest in mind, they actually only serve to generate fees for hucksters.

Avoiding Tax Fraud
The best way to avoid tax fraud is to work closely with your certified public accountant (CPA). A CPA can help you minimize your current tax burden. A sound tax strategy will address long-term goals in terms of compensation, benefits, retirement plans, business exit scenarios and estate planning. A sound tax plan will put into place the mechanisms to make this strategy work for both businesses and individuals.

Tax Calculators
Being accurate with you taxes simply means having the right resources. Beyond hiring a professional accounting firm to handle your taxes, you can also take advantage of some online tax calculators including:

1040 Tax Calculator
U.S. 1040EZ Tax Estimator
Marginal Tax Rate Calculator
Estate Tax Planning
Payroll Deduction Calculator

What You Can Do
Many times victims of fraud do not realize they have become a victim of fraud until it is too late. Being presented financial opportunities can be exciting, but it is important to think about the following warning signs if you ever find yourself with a "too good to be true" opportunity. Be on the lookout for an opportunity that:

Sounds too good to be true.
Pressures you to "act right away".
Guarantee success.
Promises unusually high returns.
Requires upfront investment.
Doesn't have a look of a real business.
Claims to be "little known".
Just doesn’t feel right.
Is a "work at home" offer.

Also Know:

You should never click on a link inside an email to visit a website. Type the address into your browser instead.
If you have doubts about a business or promoter, verify with the Better Business Bureau (BBB).
Keep receipts, statements and packing skips and review them for accuracy.
Shred confidential documents instead of simply putting them in the trash.
Don't wire money to people you don't know.
The IRS will NEVER contact you via email.
Your bank will never email or call you for your account.
There are no legitimate jobs that involve reshipping items or financial instruments from your home.
Check your monthly bank statement for charges you don’t recognize.
Order a copy of your credit report from each of the three national credit bureaus once a year.

Duane Schlereth

As one of the partners at BatesCarter, Duane is often quoted in local publications due to his expertise. His depth of knowledge when it comes to fraud has provided him an opportunity to teach numerous seminars on "How to Prevent Fraud". Contact Duane today if you have questions about fraud.
dschlereth@batescarter.com

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Fraud Specialists
The professionals at BatesCarter specialize in a number of accounting services including fraud. Preventing fraud is a topic that often discussed at BatesCarter. For more information on fraud or to learn more about BatesCarter as an accounting firm in Gainesville, Georgia, contact us today.

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