Fines and penalties associated with federal tax fraud are severe, and the IRS devotes significant resources to tracking down those they suspect of attempting to get out of taxes. More than 4,700 tax fraud investigations were conducted last year by the IRS, a 14 percent increase from the previous year.
The federal tax agency went beyond penalties and interestpunishments between 2009 and 2010. Last year 18 percent more fraud lawsuits were recommended for trial by the IRS. The IRS also reported the federal tax fraud conviction rate increased by 4 percent from 2009 to 2010.
A woman, recently tried for tax fraud, pleaded guilty to claiming 20 false deductions on her tax forms. The deductions were allegedly all children with the same birth date, none of whom existed. The 40-year-old told a federal court she acquired multiple Social Security numbers and several bank accounts to back her deductions’ claim. The woman now faces the possibility of an 18-year prison term and a fine of $750,000.
The Inspector General for Tax Administration recently audited the IRS and commended its 2,750-agent work force for staying ahead of the tax fraud games. The audit showed the time taken to conduct the average IRS fraud investigation decreased by 9 percent between 2009 and 2010, down from more than 400 days to 365.
Fraud cases prosecuted during 2011 contained some famous convictions and infamous plots. Rapper Ja Rule was sent to prison for more than two years for neglecting to pay five years in federal back taxes. He owed more than $1 million and paid it back with extra penalties.
As this information shows, the IRS has stepped up its forces when it comes to sniffing out tax fraudsters. However, the IRS only sees these people as criminals. Experienced Dallas tax attorneys know that many people in the city and across the state of Texas have been affected by the struggling economy. Many people may be opting to file their own taxes to avoid the cost of having a professional do them. Some of these so-called fraudulent cases may just have been simple mistakes. Those who are under investigation by the IRS may find it helpful to seek advice from an experienced attorney.
Source: CNN Money, “IRS crackdown: Tax cheat caught claiming 20 bogus kids,” Blake Ellis, Sept. 7, 2011
