Just like anyone else, businesses are subjected to taxes. Businesses may have to pay federal, state and city taxes.
No one enjoys paying taxes. It can be confusing and people often don’t know if they’re doing it right. Taxes for businesses can be a lot more complicated than individual taxes. One small mistake and a business could be accused of tax fraud. Here’s how that can happen:
Businesses may knowingly alter financial records to make it seem as if they earned more or less than they actually did. Some businesses may even guesstimate their documents. It’s vital for businesses to provide accurate and truthful documents to the IRS. If a business doesn’t comply, it could be accused of tax fraud and face penalties, such as hefty fines.
Claiming false deductions
Most businesses can claim a lot of tax deductions. Typical deductions include anything that would benefit the business, such as travel expenses, catering, office supplies or equipment.
However, businesses may overstate their deductions so they can pay less on taxes. Likewise, not everything is tax deductible, such as personal furniture and meals. If the IRS suspects a business is claiming more deductions than it should, it may conclude that a business is engaging in tax fraud tactics.
Hiding cash income and sales
Most business transactions are made digitally, but the paper dollar is still very much alive. Digital transactions often plainly state what kind of taxes are being deducted. But, cash income and sales must still be reported, especially if the main revenue is cash-based. If this isn’t accurately shown, the IRS may look down on these actions
Businesses must regularly comply with tax laws and obligations. If you’re facing a tax fraud accusation, then you may need to learn about your legal options.