When you’re running a business, tax is possibly one of the biggest headaches you’ll need to be thinking about. Sure, most businesses won’t want to pay, but it’s a legal expenditure you need to be thinking about and you need to be paying. It’s illegal not too, and if you don’t pay it accurately or on time by the deadline, it could land you in some serious legal trouble.
One of the scariest aspects of paying tax, or not paying tax, is getting it wrong and being prosecuted, but just to settle your nerves, today we’re going to talk about when you could get prosecuted, so you know what to look out for and how to stay out of trouble.
Cheating the Tax System
Whether you’re paying the incorrect amount for your taxes or you’re not paying them at all, the IRS will see your actions as fraudulent and you can be charged with fraud. Just a word to the wise, around 2,000 per year are actually convicted of tax crimes, which accounts for around 0.0022% of all taxpayers. However, the IRS predicts that around 15.5% of taxpayers are not actually complying with the tax laws in some way.
So, how can you be sure you’re not going to be convicted?
While the chances of you actually being convicted of tax fraud is literally less than one per cent, if the IRS predict you may be committing fraud, they’ll start an investigation into your finances to see what has happened. According to the IRS themselves, they predict that around 75% of all tax fraud is committed by individuals, such as self-employed traders that earn middle income.
Usually, the businesses involved are cash-intensive, since this is the easiest way to avoid paying tax.
How You Could Get Caught
The IRS will conduct an audit into your tax return, usually at random unless they receive a tip-off that tax fraud may be being carried out. Since it’s done at random, even if you’re misplaying your tax as a mistake, or you’ve made an error in your workings out, if the error is found during an audit, then you’ll be investigated properly.
The typical thing to happen if you’re found to have cheated on your tax is to be sentenced with a fine. If you’re caught lying to the audit team, you could be referred to the IRS investigation division further, although this will rarely happen in most cases. If found guilty of tax fraud by the CID, this is where you’d be prosecuted.
If you’ve legitimately made a mistake in your tax return and you’ve been caught, the chances are you won’t need to do any more than pay a fine. If you’re being criminally charged, then you’ll need a tax attorney to help guide you through the court case to ensure you get the outcome that’s best for you.
The fine is usually enough to convince you to work harder at making sure your taxes are paid correctly, and the same mistakes don’t happen again.
As you can see, there is a very slim chance of you get prosecuted for making a mistake when paying your taxes. The best thing to do is just take your time, make sure you get it right and be as accurate as you can!