Tax Defense Network: Tax Fraud under the Microscope
The country's economy, honest taxpayers, and victims of tax scams all suffer because of those who carry out tax fraud. Tax Defense Network reveals how tax fraud affects more than just taxpayers and the government.
Tax Defense Network: Why Tax Fraud Matters
Former IRS Commissioner Charles Rossotti said in 2002 that the IRS assesses around $30 billion in taxes a year that it will never be able to collect. After more than a decade, the figure of unpaid taxes has gone up to more than $380 billion, but the reasons for it have not changed. The IRS was then and is still understaffed. However, the number of taxpayers has increased, and tax fraud remains as prevalent as ever.
The IRS cannot catch all of the tax frauds because it does not have the staff or resources (it costs about $2.2 billion to collect $30 billion). That means money lost to the Treasury, creating a huge tax gap. The tax gap is growing because tax fraud is growing, resulting in the government having to look at other ways to recoup the lost revenue. Tax Defense Network believes tax fraud can be greatly reduced if taxpayers recognize the gravity of tax non-compliance and report tax fraud when they encounter it.
Tax Defense Network: Effects of Fraud
Be it tax avoidance or tax evasion, the tax gap hampers economic growth. Tax fraud can lead to:
- Less money for discretionary spending, including school funding, road construction, and healthcare
- Higher overall tax rates
Tax fraud leads to the loss of tens of billions of dollars each year. Without the IRS getting stronger and taxpayers reporting tax fraud by tax preparers, tax relief firms, or other taxpayers, tax fraud will continue to increase.
Tax Defense Network: Tax Fraud Methods
As tax fraud increases, more taxpayers believe they can get away with it. Those who carry out tax fraud believe they can escape punishment because this offense does not involve hurting people physically, and small businesses, tax professionals and individual taxpayers indulge in it often.
Hiding money offshore in secret bank accounts, using fake IRS tax filing forms, filing inaccurate returns and stealing refunds are the most common methods of tax fraud. According to the IRS, it is not individual taxpayers but small businesses and sole proprietorships that carry out tax fraud the most.
Tax Defense Network: Combating Tax Fraud
Efforts to catch tax frauds by the IRS, law enforcement agencies, and consumer protection units are in place but are not enough. Considering that the IRS gets millions of potentially fraudulent tax returns every year, there are many tax frauds that fly under the radar.
Tax Defense Network believes tax fraud can decrease if efforts are made not only by the IRS and law enforcement agencies, but also by taxpayers. Reporting tax frauds will curb further fraud tax preparers, tax relief firms, and tax scams. Although it is the IRS that needs to strengthen their system to combat non-compliance, taxpayers can help by keeping themselves protected from tax frauds, and reporting them to the IRS when they spot them.