In the United States, most businesses pay a significant portion of their income to the federal government in the form of taxes. Most businesses hope to maximize their profits; paying less in income tax is one way to accomplish this goal. There are legitimate ways to reduce the tax burden a business faces; many accountants specialize in this field. There are also other methods, which may be shady or outright illegal. These illegal methods are known collectively as tax evasion.
The IRS on Tax Evasion
To the Internal Revenue Service, tax evasion is no laughing matter; it and other types of tax fraud are serious offences. They are so serious that Al Capone, the notorious gangster was sentenced to 11 years in a Federal Penitentiary for tax evasion. One tool the IRS uses to uncover tax evasion is the audit. An audit is a term for a review of a business’s financial and tax records, ostensibly intended to ensure that the business is paying the correct amount in tax. In practice, an audit may be an investigative tool used to uncover tax evasion.
What to Do When You Are Audited
If the IRS is auditing you or your business, the first piece of advice is simple; do not panic. Just because the IRS is auditing you, does not necessarily mean that you are suspected or guilty of tax fraud or any other crime. The IRS occasionally conducts audits on individuals or businesses based on nothing more than random chance. The information uncovered in these audits may be used to refine the tax code or discover common issues that taxpayers may struggle with.
In the course of an audit, the IRS will examine your tax and income documents. The majority of audits will find no problems, and the higher as will take no further action. The investigators are typically good at their jobs, but mistakes can happen. Even if you have done nothing wrong, you could find yourself facing tax penalties or even criminal charges. The best way to protect yourself or your business is to hire an accounting firm versed in fraud examination services.
Benefits of Fraud Examination Services
If the IRS audit finds any problems, you will have the chance to contest the findings. Fraud examination services give you the information you need to succeed. By completing the investigation ahead of time, you give yourself the time it takes to prepare your appeal.
There is always a chance that your case will proceed to court. In this situation, the same financial fraud investigation firm may supply accountants to act as expert witnesses in court. These expert witnesses make your case much more convincing. An individual with the proper qualifications stands a much better chance of poking holes in the opposing case.
Federal income taxes are a necessary part of doing business in the United States, but no one wants to pay more than their fair share.
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Veriti Consulting LLC is a certified fraud investigative firm that provides various fraud and forensic accounting services for individuals and businesses across the United States. If you would like to learn more about the types of investigative accounting services we offer call 855.232.4410 or send us an email.
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- The Ultimate Financial Fraud Examination & Prevention Checklist
- What You Need To Know About Fraud Investigation Process And Procedures