IRS Tax Problems: Avoid Tax Fraud and Stay Out of Jail

You're Under Arrest. You think you can get away. But you can't. The IRS Hitmen are trained to recognize Tax Cheater's patterns. They can see the trail of lies and follow it straight to you. Maybe you underreported your income, maybe you made a false claim, or maybe you just made a simple mistake. It's still against the law. And you can go to jail.

Biggest Cheaters: Most people who commit Tax Fraud are middle-income. The worst offenders work in the service industry. For example, most underreporting of income is by restaurateurs, clothing store owners, car dealers, telemarketers, salespeople, doctors, lawyers, accountants, and hairdressers.

3 Common Methods: The 3 common ways people commit fraud.

1. Underreporting: Yes, underreporting is a crime! This is listing your income as less than it actually was.

2. False Claims: Usually, people claim a spouse or children that they don't have.

3. Innocent Mistakes: If you make an honest mistake on your IRS paperwork you usually won't be penalized.

“Badges of Fraud” IRS Auditors are trained to spot these common signs of Tax Fraud.

- Not listing entire sources of income
- Overstating deductions by a huge margin
- Huge amounts of “personal expenditure” deducted as business expenses
- Keeping two sets of books or no books
- Taxpayer transferring all of their property
- Taxpayer has a close relationship with all parties who received the transfer

Do The Crime pay the time. Jail time for Tax Fraud is rare. But the older the case is, the higher your chances of going to jail become. Tax Evasion caries the punishment of five years. Filing false statements can land you in jail for three years. In both cases, you can also be fined up to $250,000. In addition, you'll have to pay the court costs. Fraud doesn't pay!
Watch out! Maybe your friends or family told you it's “Okay” to make false claims or underreport your income. Don't take bad advice. Look at the facts. The IRS uses people called “Special Agents” to check for Tax Fraud. They work in the IRS Criminal Investigations Division (CID). They're highly trained detectives, they even have badges and guns! If you think you can get away with committing Fraud, think again.

* This post has been replaced with content from the archives as it was revealed that TMZ made a mistake. A Michael Phelps does owe over $20K to the ITS, but no the Olympic Record holder.