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Under the federal law of the United States of America, tax evasion or tax fraud is the purposeful illegal attempt by a taxpayer to evade payment of a tax imposed by the federal government. Many people get confused with the term ‘tax avoidance’, which is a legal utilization of tax regime in order to reduce the taxable amount. Every American citizen is legally responsible to file a tax return every year and declare his/her legitimate income honestly and pay the taxes. However, deliberately forging the income declaration by hiding real income and assets with the intention to defraud the government is termed as tax evasion fraud. Such frauds are committed by individuals and by business entities. They furnish false information on the tax return document in order to limit the amount of tax liability. Such frauds are investigated by the Criminal Investigation unit of the Internal Revenue Service (IRS). This article answers some of the frequently asked questions on such frauds and laws associated with them. How to report a tax evasion fraud committed by an individual or business entity?
As responsible citizens, it is our duty to inform the competent authority whenever we get to know about any tax fraud activities. If you suspect that either an individual or a business entity is not complying with tax laws and is involved in activities including presenting false exemption or deduction and financial kickbacks, you should fill out the form 3949-A and send it to - Internal Revenue Service, Fresno, CA 93888. You may wish to not to reveal your name but even if you reveal your identity, the same is kept confidential by the IRS and you may even get a reward for exposing the fraud. Also do furnish required information as mentioned below: • Name and address of the person you are reporting • The taxpayer identification number (social security number for an individual or employer identification number for a business) • A brief description of the alleged violation, including how you became aware of or obtained the information • The years involved • The estimated dollar amount of any unreported income • Your name, address and daytime telephone number How do I report on an inheritance tax fraud?
The estate tax in the United States is a tax imposed on the transfer of the ‘taxable estate’ of a deceased person and in addition to the federal government, many states also impose an estate tax, with the state version called either an estate tax or an inheritance tax. If you suspect somebody involved in such irregularities, you should get in touch with the Inheritance and Probate Tax helpline. They will help with compiling a report on tax evasion issues and will provide you a hotline phone number to escalate the issue. If someone suspects and reports tax fraud, but the suspicion turns out to be false, is he/she liable for misrepresentation?
Under the IRS Whistleblower rules, anyone can report about a suspected tax fraud committed by anyone. However, you would never know what happened on your report as the IRS does not provide you a status report and there is no other way to know whether your suspicion was right or false. This apart, you will not be held liable if at all your suspicion happens to be false. Is there a statute of limitation on tax fraud?
In the United States, as per the IRS rules and regulations, the following statute of limitations apply with regard to different types of tax fraud; • Civil Tax Fraud – No statute of limitations, tax can be assessed at any time. • Criminal Tax Fraud (Evasion): The criminal statute of limitations is only on the prosecution of the crime i.e. tax evasion (not the assessment of tax owed). Generally, three (3) years after the offense is committed. Six (6) years for specified offenses (including: unreported income) (IRC §6531). Under Federal Criminal Code (Title 18 U.S.C.A.) 5 years after the commission of a crime. The statute begins to run when the last of the acts constituting the tax evasion is committed. If someone is under a serious tax fraud investigation, can he/she sell or gift his/her property and claim bankruptcy?
According to tax fraud laws, you cannot gift any funds to someone else in order to avoid your creditors. Even if the property was a rental property, you can calculate how much tax you would owe by totaling up the rental amounts received. You might have to seek legal counsel specializing in tax evasion, if HMRC has all the information regarding your property. Being aware of the legal implications is the only way to make right decisions when you deal with a situation involving tax evasion frauds. If you have any questions on this, it is advisable to ask a criminal lawyer who could assist you.
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