Is The IRS Investigating You For Tax Fraud?

The IRS employs fewer investigative agents than it did 50 years ago. As taxes grow more complex and fewer agents exist to investigate claims, the probability that you’ll be investigated for tax fraud or tax evasion is low.

Though not likely, if you’re in an income bracket that warrants further scrutiny of your returns, it could. If you’re caught on the wrong side of the IRS, you could end up losing all your important assets and face serious jail time.

Do you wonder whether the IRS is investigating you for tax fraud? There are signals to look for. Read on to learn more about them.

Paying Taxes

While some people disagree, paying taxes is important. Taxes fund our military, our schools, our roads, and so many other important things.

The IRS estimates that 14 million Americans owe over 131 billion dollars in taxes. That’s enough to pay for the entire budget of the Department of Education twice over!

Given that kind of money and what it pays for, the IRS and the United States government have a vested interest in collecting what you owe them.

Though the IRS remains woefully short-staffed for enforcement, that may not last forever. New elections bring new priorities. Future lawmakers may ratchet up IRS enforcement.

If caught, not paying taxes you can face severe financial and criminal penalties. Failure to file charges a 5% penalty every month you don’t file. After 60 days, you’ll owe an extra $135 or 100% penalty.

If you file and don’t pay, the IRS charges a 0.5% penalty on your unpaid amount. You’ll also accrue 3% interest.

While these numbers don’t sound like a lot, they add up. Years of not paying taxes can result in the seizure of assets and jail time.

IRS Investigation Signs

If you’re undergoing a civil investigation by the IRS, there are some signs that your case may turn criminal.

Is the IRS Investigating You For Tax Fraud? You’ll know if the IRS hires a lawyer to assist with the civil investigations.

IRS investigations for tax fraud also means your auditor will drop communication with you. If your auditor becomes silent or disappears, a criminal investigation may already be underway.

This means the auditor recognized what is known as badges of fraud, whether it’s income that you failed to report or shady accounting practices meant to hide income from the government.

At this point, the criminal arm of the investigation scrutinizes every aspect of your life. This means expenses, all recorded financial data be it personal or business, and your conduct.

If you notice an auditor or civil agent asking a lot of lifestyle questions combined with requests for photocopies of all bank account information, you’re more than likely under investigation.

Tax Fraud Is Serious

A tax fraud conviction can land you up to five years in prison and a fine of $250,000. If your business is convicted, you’ll face a fine of half a million!

If you notice the warning signs of a pending criminal investigation, it’s time to lawyer up and get ready. Better yet, it’s best to stay on the right side of the IRS.

Are you in need of more handy tax tips? Check out the rest of our site for the latest legal and financial news.