So, you want to know all about tax fraud? Well, that is one of the duties of every patriotic citizen. We have to educate ourselves on ways in which we can comply with the laws of the land. Else, we may end up paying for crimes we commit through ignorance.
First Things First: What is Tax Fraud?
According to Investopedia, tax fraud is when you or a business entity consciously and deliberately falsifies the required information in filing tax returns. That way, they can limit the amount of tax they are liable to pay.
It is clear now that tax fraud is not just an error. Furthermore, there are different categories of tax fraud, with each of them having diverse penalties. If you do not have proper guidance or advice, what seems to be a small matter can go out of hand.
On the other hand, individuals may not intend to falsify their tax information. It can be accidental tax fraud. This happens when you are not keen during the tax season.
Whichever the intent of the tax fraud, both will cost and put you at loggerheads with the tax collector.
How Serious is Tax Fraud?
The IRS doesn’t pursue tax fraud for every individual. However, when they catch you, the penalty is quite harsh. In such a case, the government will force you to repay your tax coupled with an expensive fine.
The Internal Revenue Service takes it seriously when you file a false return or any other legal document. When upon investigation substantive information turns up, Tax Fraud charges could result. That is a grave crime that could send you to jail for five years if you are found guilty.
The Cost of Tax Fraud in 2021
Tax Fraud is quite common in the US as it is in the rest of the world. For instance, it is estimated that Tax Fraud costs the United States $190 billion a year. In the year 2020, IRS reports identifying tax fraud costing $2.3 billion.
Looking at the cost of Tax Fraud yearly, one can’t help but ask themselves who in the world are these Fraud stars. Well, these are corporations and individuals. Company employees also fall under the “individuals” categories. How do you deal with that as an employer?
How to Prevent Employee Tax Fraud in 2021
You do not know an employee whom you have just hired to work for you. You are looking for the right applicant with the right skills and qualifications to fill a particular position in your company.
The essential quality that you should not overlook is integrity. That goes a long way since you build a partnership on trust. Moreover, that calls for some digging on your part.
It is a popular business principle that your employee is the closest person to you for your business to grow. You have to consider the relationship between you and your employees as a partnership. No matter how “insignificant” their job may seem.
Your company’s success also depends on the input that every worker contributes on the job in addition to honesty. Else, you will see your business on its knees sooner than later.
Therefore, it is best to put in check any possible incident of employee tax fraud before it happens. That is where a background check for employment comes in.
How Employee Background Checks Help Prevent Tax Fraud
It is best to put an axle to the root of the problem rather than the stem. An employee who is dishonest in their tax payment may not be honest in their dealings with the day-to-day duties. So take care of the problem before hiring them.
Pre-employment background checks help you to discover the following information about applicants;
Consistency.
Honesty.
Criminal records, which includes IRS charges.
However, you ought to be careful not to trample on the potential employee’s rights. There is a thin line there. That is why you need a professional to help you do that.
Therefore, background checks on employment play a significant role in uprooting problems such as future tax fraud, among others.
Do You Want to Learn About Tax Fraud? Here are Some Valuable Resources in 2021
From what you have learned so far, you realize who critical it is to guard against tax fraud. If you’d like to learn more about Tax Fraud, here are some great sources for you;
The internet has a lot of information on tax fraud. Below are some credible sources you can search out;
· FedorTax.com has a wealth of knowledge regarding this subject. Mainly because they are Attorneys and Counselors at Law, that is a great place to begin.
· Investopedia.com is also a great place to learn about tax fraud. They have a lot of research done on the subject.
· IRS.gov also informs you on how you can report tax fraud. It is worth your time.
IRS Taxpayer Assistance Centers. You can visit any IRS center near you to get your questions answered.
The Taxpayer Advocate Service office is another place where you can get help and get more info on tax fraud.
The local library is a great place to get your questions answered. However, if your attendant cannot give you answers, they can direct you to a local organization that will be of great help to you.
Conclusion
Whether you run a company or an employee, tax fraud is a serious crime that will cost you. Therefore, it is vital to learn about tax fraud and guard against committing the crime by all means. Do not forget to do legal background checks on employees to ensure integrity and transparency for a healthy and successful business.
