Signs that you're a target of tax fraud include the inability to file a tax return because it's already been filed, intimidation by phone calls or emails demanding tax payment, and odd requests by a tax preparer.
Know the Signs of Identity Theft
Be alert to possible tax-related identity theft if: You get a letter from the IRS inquiring about a suspicious tax return that you did not file. You can't e-file your tax return because of a duplicate Social Security number. You get a tax transcript in the mail that you did not request.
A typical warning sign is living beyond your apparent means without an evident income stream to back up an extravagant lifestyle, being secretive about the type of work you do, never taking a holiday and thus never giving anyone else the opportunity to get close to what you do.
Signs that You May Be Subject to an IRS Investigation:
The resulting penalties depend on the type of fraud committed. Someone convicted of willful failure to file a return, supply information or pay taxes, for example, can be thrown in jail for up to one year and face a fine of $100,000 (individuals) or $200,000 (corporations), plus court costs.
If you find yourself or someone you know to be a victim of tax-related identity theft, here are some steps to take:
The red flag indicators of this scheme may include a minimum number of employees, lack of warehouses (or the relevant warehouses are located in other region), absence of documents certifying purchase of goods which makes it impossible to identify the manufactures of such goods.
Tax evasion is an illegal activity in which a person or entity deliberately avoids paying a true tax liability. Those caught evading taxes are generally subject to criminal charges and substantial penalties. To willfully fail to pay taxes is a federal offense under the Internal Revenue Service (IRS) tax code.
The IRS does check each and every tax return that is filed. If there are any discrepancies, you will be notified through the mail.
The Freedom of Information Act, 5 U.S.C. 552, provides any person the right to request access of federal agency records or information. ... All IRS records are subject to FOIA requests.
There are typically three ways the IRS will contact you: a mailed letter, a phone call or a personal visit.
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