IRS Tax Code 101: What is a Tax Crime?

how to pay payroll taxes

No one enjoys paying taxes. In fact, most people cringe at the idea of having to hand over a significant chunk of their earnings to the IRS. But all personal preferences aside, paying taxes is an absolute necessity for law-abiding citizens. Many people, however, try to cut corners and save some money by exercising questionable practices. From IRS payroll tax payment transgressions to concealing foreign assets, people are getting more creative by the day. But, do you know how these practices impact your legal standing? Are you guilty of committing a tax crime, or have you simply committed an innocent mistake? Could the IRS come after you and put you in jail? Read on to find out the answers.

Can the IRS prosecute you?

It’s the IRS’s job to be always on the lookout for tax crimes. However, as of late, the IRS has been struggling with serious underfunding and understaffing. This has led to a noticeable decline in the number of prosecuted crimes.
Why? Tax crime prosecution can get expensive. It involves a far greater investment of time and resources than a settlement would. For this reason, the IRS is far more likely to try and come up with a reasonable agreement with those who’ve failed their taxing duties.

This is especially true when you’ve failed your tax filing or IRS tax payroll payment responsibilities for a good reason. The IRS has to be smart about where to concentrate resources. They know they’re better off going after serious offenders, such as criminal money launderers, than the average Joe.

Still not sure about where you stand? Are your accounting mistakes serious enough to catch the IRS’s unwanted attention? Here are some of the tax offenses considered criminally prosecutable by the IRS:

IRS Payroll Tax Payment Transgressions

There are pretty clear guidelines on how to pay payroll taxes to the IRS. Hence, why intentionally trying to pay less through dubious methods can definitely get you in trouble. Have you withheld your employee’s taxes, despite collecting them? Or perhaps, reported false numbers or secretly paid employees in cash? All of these actions are considered crimes and could potentially be prosecuted:

Related Blog: Answering 5 FAQs about IRS Payroll Tax Payment

Money Laundering

Money laundering involves willfully attempting to hide illegally obtained income from the government. No taxes are paid for these illegally obtained funds. This type of activity is typically linked to other very serious types of criminal acts. Therefore, this constitutes one of the most serious tax offenses out there.

Bank Secrecy Act Violations

It’s not uncommon for business owners to try and protect their assets and save money by taking their income abroad. The bank secrecy act can protect you from prosecution in many ways. It is, however, easy to get confused between taking advantage of secrecy and abusing it. Once you cross that line, the IRS might come after you.

Related Blog: Understanding IRS’ First-Time Penalty Abatement Policy

Refund Fraud

As we mentioned before, good intentions can go a long way with the IRS. However, refund fraud, demonstrates all the contrary. This typically involves intentionally trying to fool the IRS to access tax refunds that you don’t deserve. This is basically cheating the IRS out of money and puts you at risk of prosecution.

Overall, if you find yourself at risk of being prosecuted for a tax crime, the best thing you can do is get legal assistance as soon as possible. If you need some expert advice on how to pay payroll taxes to the IRS, correctly file your tax returns or getting out of any other IRS tax related problem, speak with the attorneys at the Law Offices of Nick Nemeth. For a free, no-obligation consultation, simply call (972) 484-0829 or fill out our contact form.