As you begin the tax planning process and as
you prepare your returns, it’s important to remember to be completely honest.
Everyone wants to pay less in taxes, but the right way to pay less is with the
help of a skilled accountant who operates within the bounds of the law. The
wrong way is to lie or cheat. The IRS has really cracked down on consequences
for those who commit “willful” fraud, and fraud doesn’t have to be some big
huge thing either. Even just a little lie could find you facing such serious consequences
as jail and huge fines and fees.
So, what exactly constitutes a “willful” tax
crime? Basically anything dishonest you state on your tax forms, beyond an
obvious mistake or some faulty math, counts as a willful crime. The IRS defines
willful crimes as those that involve voluntary and purposeful violations and/or
an intent to escape legal, tax-related responsibilities.
Some of the most commonly reported (and
prosecuted) tax crimes include:
l Reporting
less money than a person actually has/earns
l Not
declaring offshore accounts
l Fraudulent
deductions
Of course, it is possible to ignorantly not
realize you need to report a certain income or to not realize that a particular
deduction is not allowed. However, if courts and the IRS can determine that
your conduct makes you look like you are willfully breaking the law, that can
spell big trouble.
The simple answer to staying out of trouble
with the IRS is to be honest in all of your dealings with it. Being honest
isn’t easy if you don’t know the tax laws inside and out, however. So, you have
two choices. You can commit yourself to learning and thoroughly following tax
law, or you can hire a trustworthy accountant to do it for you. Either way,
remember that, when it comes to the IRS, honesty is always the best policy.
