All business entities are subjected to federal tax laws. On top of that, there are also regulations at the state level.
All of this can be overwhelming even for the seasoned business owner. However, the truth is that if you fail to honor your tax obligations, you could face prosecution.
Outlined below are three of the more notable examples of tax fraud:
1. Illegal deductions
Many of your business expenses will be tax deductible. For example, if you regularly host client meetings or travel, you may qualify for deductions on these expenses. Nonetheless, not everything is tax deductible and if you claim for something that your business is not eligible for, you could find yourself in hot water legally.
2. Hiding revenue
Your tax obligations will be based on numerous factors, including the amount of revenue that you generate. It is vital that the numbers reported are completely accurate. Errors in your yearly or quarterly totals could be perceived as an attempt to get out of your tax obligations, which can ultimately result in some severe criminal penalties.
3. Excluding cash sales
Whilst we are increasingly moving towards a paperless society, many deals are still done in cash. If your company takes in considerable income this way, it is still eligible for tax. If you fail to declare or underreport your cash earnings, you could find yourself in trouble with the Internal Revenue Service.
Regulatory compliance is very important in the corporate world. If you are facing accusations of tax fraud, then it’s vital to seek legal guidance and start planning your defense strategy.