Paying taxes and filing returns is an important civic responsibility. While some employers may fail to make a background check on tax fraud, you wouldn’t want to be on the wrong side of the law. Tax fraud occurs when you knowingly forge information on tax returns to limit tax accountability.
Employers play essential roles in the growth of an organization. For this reason, an employer would be scared to hire someone who falsifies their tax returns. Lying about vital government requirements tells so much about an employee’s character.
Here’s how tax fraud can affect an employment background check in the year 2021:
We Believe What We Perceive
From the words of Allen Brown, a director of internal audit in Louisiana Community College, “People believe what they perceive.” For this reason, employers are vigilant. Senior personnel organizations grow to be part of the company’s image. When employers look for the next good hire, they make a background check to hire the right people. With the right staff, an organization’s assurance to attain its goals is boosted.
A Gauge for Trust
Most employers would want to know an employee’s past to gauge their trust. For instance, if an employer discovers tax fraud in potential employees’ past, they might not get hired. While it is exhausting to make background checks, it is disappointing to hire employers prone to fraud. It’s hard to leave essential aspects of your business to an employee you don’t trust.
Fine or Imprisonment
Tax fraud accumulating to large amounts of money may call for fines or imprisonment. As employers make background checks, they can locate felonies. In such cases, employers may report. When convicted, an individual attracts a fine of about $100,000 or gets imprisoned. Besides, tax frauds draw different penalties according to the law.
Common ways Taxpayers Fail to File Tax
Amid looking for job opportunities and being caught in other life struggles, we may fail as taxpayers. But do not fret like Nikki Giovanni confirms, “Mistakes are a fact of life. It is the response to the error that counts.” To avoid a repeat of taxpayer mistakes while job hunting, find here the common ways you might have failed as a taxpayer when filing taxes:
- Reporting less income. Whether willful or not, failing to report all your income is an offense. Frequently observed with freelancers who mostly fail to trace some invoices.
- Over-estimated non-cash aid. Benevolent aid might be complex to value. For instance, the pricing of a $700 donation is $7,000. You’re likely to file incorrect returns when you fail to identify the correct pricing.
- Increasing other federal tax deductions cost. Accidentally, you may overestimate the deduction cost, for example, education expenses sponsored by your job or medical expenses.
- Forget to file taxes. Like mentioned earlier, sometimes life gets busy. Filing taxes is the last thing on your mind. By the time you realize it, the tax day is gone. You end up attracting penalties on your account.
- Present half-truths about business expenses. In cases where employees have properties apart from those provided by the employer. When using such items during working periods, present the correct percentage. For instance, using your work car personally should be separated from when it is for work. Half-truths affect your tax file.
What Meet the Requirements for a Fraudulent Tax Activity
As a taxpayer or employee, you might want to know the requirements for a fraudulent tax activity:
- Leave out taxable income or knowingly underreporting. It’s considered fraud to leave out essential information concerning your payment.
- Keeping double financial records. Having two financial records means you have something to hide, and this is fraud.
- Concealing or relocating assets or taxable income. Hiding or changing some aspects of your taxable income is a fraudulent tax activity.
- Personal expenses as business expenses. As revealed earlier, using company properties for your gain and claiming to be business expenditure is tax fraud.
- Claiming fake or overestimated deductions on a return. From charitable donations to overrated travel expenses
Who Gets Imprisoned for Tax Evasion?
A countless number of people get scared of the federal government when audits finish. But don’t freak out; a handful of people end up in jail for tax evasion. For instance, in 2015 the Internal Revenue Service (IRS) prosecuted only 1,330 people out of 150 million people.
Consequently, tax evasion cases followed through on by the IRS include people who fail to file a required tax return and misreport income or deductions on tax returns. Fortunately, for people who are unable to pay taxes, the IRS never chases them. But woe unto those who hide properties they can use to pay accumulated taxes.
Fraud tax activities are costly to the government. Tax fraud or tax negligence has caused a gap in dues collected. The recruiting procedure, especially in money matters, requires a keen background check by employers.