Bad Economy? The Gov Turns Up the Heat on Tax Evaders

Date: 01/24/12

Topic: Criminal Tax Representation

One strategy counties use for collecting revenue during hard economic times is increasing the pressure on those committing tax fraud and tax evasion. According to the Associated Press

Bankrupt Greece, for example, has come up with a list of some 4,000 persons who committed tax fraud/evasion, and it is hounding them for back taxes and penalties.

Greece’s outstanding national debt is approximately 78 billion, and it seeks 19.5 billion from tax evaders. If Greece officials were to collect all of this amount (which they won’t), they would nearly break even this year.

Because of California’s fiscal crisis, one wonders whether it will follow Greece’s lead in attempting to turn up the heat on those who have committed tax fraud.

California’s “Franchise Tax Board describes tax fraud to include the following:

  • Failing to report all income received.
  • Claiming to be a resident of another state while residing in California.
  • Making false or fraudulent claims for refunds.
  • Not filing state income tax returns.
  • Questionable tax practitioner practices.
  • Opening and closing of new businesses to evade taxes.
  • Preparing documents, books, and records that understate the true income or overstate the expenses of a business.

The federal government has already begun to redouble its efforts to fight tax fraud.

In 2010, Congress passed a law known as FACTA (“Foreign Account Tax Compliance Act”) to fight tax evasion by U.S. taxpayers with foreign accounts. This Act applies to accounts beginning December 31, 2012. This act coupled with new 8938 filing requirements has made it even more difficult for U.S. citizens to hide assets in foreign countries.

In short, we may see even further efforts, by both States and the federal government, to fight tax fraud as economic conditions continue to be less than favorable.

If you have undisclosed foreign accounts or income producing assets / entities, we can help.