Sloan P. Ellis Law Firm, LLC

Avoiding tax fraud

Filing taxes is a complex process that often requires information to be provided in a manner that seems convoluted to most. In general, dealing with the IRS is not something people want to do, however, if you have been charged with fraud or tax evasion it is not something you can avoid.

The first step in handling a fraud charge is to seek the advice of legal counsel in order to better understand your rights and options. 

However, knowing the most common types of tax fraud and how to avoid them may save you from becoming involved in tax trouble.

IRS debt settlement

A private company that offers to settle your debt with the IRS is most likely a scam. These companies will offer to help you settle the debt, take your money, and leave you still owing the IRS.

You now believe that your debt has been paid and do not take any further steps to pay the IRS. The IRS will consider this a willful act of not paying taxes owed, enact penalties, interest, and eventually charge you with fraud or evasion.

An Offer in Compromise is the only way you can get your tax liability reduced by the IRS. This process requires extensive paperwork and that you provide records attesting to what you owe and the current state of your finances and assets.

The IRS will examine the information and then make a determination if a reduction in tax liability is appropriate.

Emails from the IRS

Receiving an email from the IRS claiming that more information is required to process your tax return is a red flag. Replying to this type of email opens you up to identity theft.

In such a case, a criminal could then use your information to file a tax return and receive a cash refund using your name and social security number. You then file your tax return to claim a refund and the IRS decides that you are committing fraud.

The IRS never emails taxpayers. If there is something wrong with your return, you will receive official correspondence in the mail.

Preparer fraud

In some cases, your tax preparer commits fraud. This is typically done by a preparer that charges based on the amount of refund you will receive. To accomplish this, the preparer falsely inflates your refund and since you are also required to sign the tax return, the IRS can charge you with committing tax fraud.

Also, beware of tax avoidance schemes recommended by a preparer. If he or she promises you won't have to pay income taxes by using the scheme, consider it a red flag of fraud.

To avoid this, use a reputable tax preparer that is either a Certified Public Accountant or an enrolled agent with the IRS.

Facing these types of charges can be very scary and stressful. If you have been accused of fraud, contact a local South Carolina attorney experienced in tax fraud and evasion.

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