Santos, Postal & Company, P.C., Here Are Your Articles for Thursday, February 15, 2018
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Why Is Padding Your Tax Deductions a Risky Proposition?

 

"In this world, nothing can be said to be certain, except death and taxes" is a quote often attributed to Benjamin Franklin. With that in mind, it's best to be prepared, at least financially, for taxes and tax season each year.

The Risks

When it comes to deductions, things can get a little sticky. What's the harm in taking a little extra here or a little extra there? 

Taxpayers "shouldn't gamble with their taxes by padding their deductions," says IRS Commissioner John Koskinen. Overstating charitable contributions, padding business expenses, and falsely claiming earned income or child tax credits are common ways unscrupulous taxpayers try to cheat the IRS. But the organization is wise to these gambits and is catching cheaters with its efficient automated systems.

The Penalties

If you knowingly file incorrect tax returns, the government may apply the following civil penalties:

  • 20% of the disallowed amount for filing an erroneous claim for a refund or credit
  • $5,000 for filing a "frivolous tax return" — that is, one missing enough information to figure the correct amount or one that contains substantially incorrect information
  • In addition to the tax owed, a 75% penalty if the underpayment resulted from tax fraud

The IRS also can take you to criminal court and seek additional fines and/or prison time if it suspects and proves you are guilty of the following:

  • Tax evasion
  • Purposely failing to file a return or pay taxes due
  • False or fraudulent statements
  • Identity theft

Although dedicated debtors prisons may no longer be in use in the United States, there are plenty of consequences that can affect your business and your life, as you can see. Work with us to ensure that you pay everything you have to — but not a penny more!

 
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Santos, Postal & Company, P.C.
Santos, Postal & Company, P.C.
240-499-2040
BGreenfest@SantosPostal.com
11 North Washington Street
Suite 600
Rockville, MD 20850
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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