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False Tax Returns

Tax Services. Tax Problems. > False Tax Returns

False returns

Introduction 

Are you sure that the tax return you are about to file is correct and doesn’t have any errors? 

Sometimes, it is hard to be 100% sure. 

Well, you see, when a taxpayer files their return, he or she needs to include every income detail and the taxes paid throughout the financial year. These income details will consist of domestic and foreign transactions, and hence the taxes levied will also be different. 

If somehow any of the detail is missing or manipulation has been done with the taxes being paid, the return can be taken for a review by the IRS under the rules of submitting an incorrect tax return. 

Here, in this article, we will give you details regarding false returns, their types, the penalties you can be assessed, and the aftermath. 

What is a false return?

A false return is a tax return where some details mentioned are either mismatched with the actual data or manipulating incomes and taxes paid. Intentionally submitting a false return leads to taxation fraud. Taxpayers should be conscientious and try their very best to avoid errors. 

If you are submitting a falsified tax return to the IRS, and if you are caught during screening, you will be penalized. The penalty will depend on the type of errors present in the false returns and whether it was intentional. 

In what way does the IRS detect fraudulent tax returns?

Your identity numbers and tax information are confidential. Regardless, return files are screened and scrutinized by the IRS department. They employ different techniques to check whether the return is correct and complete or not. 

Here are some ways of how the IRS determines a false tax return after it is filed:

  • The tax data the IRs have on file don’t match the tax return or the taxpayer details. 
  • Not paying the taxes intentionally despite the taxpayer being capable enough to pay off the debts. 
  • Frequently, the higher the income, the higher the taxes, so some people intentionally reduce their income to avoid the high tax amounts. 

What are the types of false tax returns?

  1. When a taxpayer shows false information on their tax return, he is submitting a falsified tax return. 
  2. Sometimes, the return files contain incomplete information where the taxes and the concerned details are not shown clearly. Hence, it becomes challenging to understand the correctness of the tax return. 
  3. A tax return consisting of fake deductions is categorized as a false return which is most often done to get fraudulent refunds. 
  4. Not filing the FATCA or FBAR forms while being required to file lead to severe penalties. 

Conclusion 

How would you know that you may be penalized for filing false tax returns? 

If you want to avoid the penalties on tax fraud and submit a correct and complete return, you must carefully review and include all relevant information pieces. It is crucial to check your return before filing it to avoid unnecessary headaches and penalties. 

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