Tax-Definition.org ( href="http://www.tax-definition.org">http://www.tax-definition.org ) is
reporting on the second part of the tax scam alert from the Internal Revenue
Service (IRS): Manipulation of Tax Codes and Laws in Tax Scams.
With the IRS bringing out its annual listings for the numerous tax scams that
are taking place, the debate on the misuse of tax laws has become hotter. The
"Dirty Dozen" looks at different kinds of tax scams that have taken place in a
year, to keep the people of United States aware of the fraud agencies and their
owners who move around in the guise of tax professionals.
The modus operandi of the so-called tax agencies and tax counselors is to
manipulate the established rules and laws in order to get tax reduction. They
catch hold of people who are most prone to falling for their false claims.
Following the tax-deduction techniques given by them can land you in prison. The
IRS keeps a strict tab on the numerous agencies and takes legal action against
the fraudulent ones.
The different clauses and doctrines that are twisted and used for getting tax
reduction are:
Evasion of employment tax: There are times when the tax agencies
instruct the tax filers not to withhold the employment taxes from their wages.
This is a wrong interpretation of the Section 861. Following anything like this
can lead to criminal convictions and injunctions. Penalties and extra taxes can
be charged from the people found guilty by the IRS.
Corporation sole: There are many people, who apply for incorporation
by claiming to be a part of some religious organization, or other phony
institution in the hope that they may be exempted from federal income tax. The
corporation sole statute gives the benefit of tax exemption to the to religious
leaders, thereby separating them from the ownership of church and other assets,
legally. The tax agencies ask people to use this statute to escape taxes, other
debts, and child support.
Increasing offshore transactions: Most of the people are advised to
hide their income in offshore banks and accounts by the tax agencies. Such
people tend to use offshore credit cards, life insurance, leasing schemes, wire
transfers, and foreign trusts to evade paying huge taxes. The IRS and other U.S.
agencies are on a look out for such people who approve of and promote such
illegal transactions.
Cases of Identity thefts: The IRS has received information about some
identity thefts where impostors have stolen valuable information from people
guising themselves as officers from the IRS. The stolen data has then been used
for credit card and loan application. Some people have also received fictitious
correspondence from different agencies posing as the IRS. People tend to
disclose very important information to them like their social security and
checking account numbers, and many other things.
Deductions for charitable institutions: Different charitable
institutions and non-profit organizations have the benefit of tax deductions.
The tax agencies advise their customers to transfer all their assets and other
properties to any such institution, on paper. The person still maintains actual
control or hold of that property. This helps the individual to get tax exemption
and other deductions. IRS discourages such practices and takes legal action
against the guilty.
The best thing to do is to avoid getting duped by fraud tax agencies, and
contacting the IRS directly for any sort of information, or clarification.
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