How might an account with fraud examination skills be utilized by the IRS in tax audits?...

How might an account with fraud examination skills be utilized by the IRS in tax audits?
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Expert Solution

In most tax audits the IRS is only interested in collecting the taxes owed, plus interest along with a few penalties. Perhaps the IRS might impose a negligence penalty or a late filing penalty. However, if during the tax audit the IRS suspects that you have committed tax fraud they can impose a civil tax fraud penalty. The civil tax fraud penalty is equal to 75% of the tax owed, plus interest on the penalty. Worse yet the IRS tax auditor might ask the tax fraud referral specialist to look at your case to see if it should be sent to the IRS Criminal Investigation unit for criminal tax prosecution. The IRS tax fraud referral specialist is usually not a tax lawyer, however, he has experience in tax fraud cases, and will seek the advice of the IRS' own tax fraud lawyers for help if it seems necessary.Tax crimes include filing a false tax return, tax evasion, filing false documents, failure to collect employment taxes, failure to pay taxes, and failing to file a tax return. Tax evasion includes not just the failure to report all income, but also overstating the amount of tax deductions. The tax evasion penalties for criminal tax fraud are very serious. They range up to 5 years in jail, plus fines of up to $500,000, plus the costs of prosecution for each separate tax crime.

ekkarill92 answered 1 year ago

How might an account with fraud examination skills be utilized by the IRS in tax audits?

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