Claiming deductions on a tax form may help save money in taxes, provided the deductions are permissible under law. A person who claims illegal tax breaks could end up in serious trouble with the IRS. Even individuals who work for the agency do not escape scrutiny.
In March of 2022, The Philadelphia Inquirer reported that a man who once worked as a supervisor in the IRS Philadelphia office had pled guilty to multiple forms of tax evasion. This case illustrates the various ways a person could break the law while trying to avoid paying taxes.
Illegally claiming deductions
The U.S. tax code allows for people to claim tax breaks if they own rental properties. In the case of the IRS supervisor, he claimed deductions on houses he owned that were not rental properties at all. People can also file for deductions on the money they give to charity. To secure this kind of tax benefit, the Philadelphia supervisor falsely claimed that he had made donations to a church.
Tax law also permits people who serve in the military to claim deductions in different situations. The IRS supervisor attempted to make a deduction for unreimbursed expenses from working in the U.S. Army reserves. In reality, he had carried out no military work for the year in which he made the claim.
Faking documents to comply with an audit
When the IRS gets suspicious of possible tax fraud, they generally initiate audits. The IRS supervisor attempted to validate his deductions during an audit by creating false documents. However, these documents did not prove convincing to the IRS. In the end, the supervisor faced federal charges for tax evasion.
Enduring the consequences for breaking tax law
While the Philadelphia supervisor pled guilty to the charges, he still had to face sentencing which included the repayment of $75,000 to the IRS and a possible five years in prison. Some tax evaders encounter stiffer sentences, incurring $250,000 in fines as well as civil penalties and interest owed on delinquent taxes.
Honest mistakes on a tax form usually do not incur these kinds of penalties. Nonetheless, it is crucial to avoid the appearance of fraud when presenting tax forms to the IRS. Hiring an accountant to help go over taxes may be worth the effort and money to avoid an IRS investigation.