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The basics of tax evasion

On Behalf of | Nov 3, 2017 | Tax Crimes |

To understand tax evasion, Maryland residents should first know the tax process in more detail. When they file a return stating their yearly pay, the IRS will find their adjusted gross income by calculating deductions or expenses that cannot be taxed. Common deductions include business travel, educational expenses and charitable donations.

The IRS may further reduce the amount a taxpayer owes by applying credits. For example, a credit can be applied for every dependent child in the household or for households that take substantial steps to become more energy efficient.

While simple errors are understandable and may only lead to a small fine after the individual pays the amount they should have paid, it is a crime to deliberately underpay. For example, many people who deal with cash payments under-report their incomes. Additionally, businesses owners might inflate expenses for greater deductions, and individuals may claim more dependents than they actually have. Some may not file a return at all. If the IRS suspects tax fraud, it will pursue an investigation and determine whether or not to prosecute.

When individuals believe they have been wrongly accused of tax crimes, they may wish to consult an attorney. The lawyer could determine if the alleged fraud was in fact a result of carelessness, such as forgetting the due date or not knowing what should be reported. Another possible defense strategy is to show that the IRS has insufficient evidence of fraud; this will probably require the attorney to hire investigators. The lawyer could also discuss the possibility of a plea bargain.