During tax season, may people are tempted to minimize their tax liability by underreporting income or overclaiming exemptions and deductions. This may seem like something that is easy to get away with, but it most certainly is not.
The IRS takes false tax returns very seriously. At best, inaccuracies on an income tax return can lead to costly and burdensome IRS tax audits. In more severe cases, fraudulent tax returns can bring criminal charges, hefty fines and jail time.
Earlier this month, the Boston Tax Court sentenced a man to 18 months in prison after he was convicted of “significantly understating his income” on tax returns filed between 2003 and 2006.
The government accused the man of failing to report more than $700,000 in income over the four years. According to the charges, the man reported over $600,000 in income from his regular job working for an information technology contractor. However, he failed to report the income he earned from side jobs that included consulting work and selling used computer hardware.
Apparently, the man never mentioned this income to the tax preparer he hired to file his returns.
In addition to his prison term, the man will be required to pay more than $200,000 in back taxes to the IRS and will be charged a $10,000 fine.
Very few people enjoy paying taxes. However, the risks of trying to illegally skirt tax liability are often much higher than the benefits.
If you have already received a notice of investigation or audit from the IRS, you need to take it seriously, even if you don’t believe you have done anything wrong. Often, a skilled tax attorney can find ways to minimize your financial and criminal liability.
Source: Hampton-North Hampton Patch, “Local Man Sentenced to 18 Months for $700k Tax Fraud,” Kyle Stucker, Feb. 16, 2012.