Between now and April 15, many people here in Boston and across the country will fill out forms intended to go to the IRS. In an attempt not to pay more in taxes than necessary, they will search for the best and most deductions and credits they can use to reduce their potential tax bills. However, some people will make costly mistakes that could end up construed as tax evasion, which could get taxpayers into hot water with the agency.
Accusations of cheating the IRS can result in criminal charges in addition to any consequences levied by the agency. Those who end up facing criminal penalties for tax evasion will often find themselves standing before a U.S. District Court judge. If convicted, an individual could face a wide range of penalties that may not include incarceration. Of course, that assumes that a judge does not decide to make an example of him or her.
When it comes to settling the bill with the IRS, the first thing that pops into most people's heads is personal and business income. While that is the case, the agency does collect other taxes as well. A Massachusetts small business owner who has employees needs to remember that the nation's taxing authority expects to receive the payroll taxes owed. If those are not paid, employers could find themselves facing charges of tax evasion.
The IRS wants the money it believes people here in Massachusetts and elsewhere owe. The agency will conduct investigations when its agents suspect that an individual or business failed to pay any amounts owed. Depending on the results of the investigation, agents will make accusations of tax evasion and other crimes against taxpayers.
Many celebrities use creative accounting techniques in order to avoid paying too much to the IRS, but most of them are legal. On occasion, one of them gets into trouble because they "colored outside the lines" and end up facing charges for tax evasion. One such celebrity, reality TV star Mike Sorrentino, recently began an eight-month prison sentence arising out of such a charge. Massachusetts residents may avoid the same fate by understanding what he did.
The IRS scored much more than a glancing blow to former action movie powerhouse actor Wesley Snipes this week, with the Tax Court sustaining the Service’s rejection of a lowball offer in compromise settlement. Snipes owes more than $23.5 million in back taxes to the government, dating back to between 1999 and 2006, a period during which he made approximately $40 million but paid no taxes (he also didn’t file tax returns during that time).
The Foreign Accounts Tax Compliance Act (FATCA) is now operational and the Internal Revenue Service is reportedly poised to start issuing penalties for non-compliance. FATCA requires foreign banks to disclose to the federal government Americans who have foreign accounts with more than $50,000. The 30 percent withholding penalty on foreign transactions was supposed to be a deterrent; but with few withholdings taking place and more to come, the deterrent may not have had its intended effect.
With tax reform signed into law, many business owners are optimistic about what 2018 will bring. A substantially lower tax rate could mean substantial savings come April 2019. Of course, businesspeople want to pay only as much as they legally owe in taxes; and if they can avoid paying additional taxes, they will.
Taxes are one of the many things on a long list of obligations a business owner must address. Although entrepreneurs balance many obligations, a failure to properly deal with Uncle Sam can result in serious ramifications.
In what seems to a recurring theme, a mass data release - this one known as the "Paradise Papers" - has disclosed the identities of high-profile users of offshore accounts. It is vitally important to note prior to discussing the content of the Paradise Papers that there is nothing inherently wrong with having offshore or foreign accounts. The IRS even recognizes the validity of these accounts, which is why it established protocols for reporting income from them via the FATCA and FBAR.