Tax Evasion and Tax Audit

Definition of Tax Evasion Tax scheme usually entails levypayers deliberately misrepresenting or concealing the true state of their affairs to the tax authorities to reduce their tax liability and includes in particular dishonest tax reporting, such as declaring less income, profits or gains than actually earned or overstating deductions,. It is an illegal practice where a person, brass instrument or corporation intentionally avoids paying his/her/its true tax liability. Examples of practices which be considered tax evasion Knowingly not reporting income * Under-reporting income (claiming less income than you actually received from a specific source * Providing false information to the NBR more or less business income or expenses * Deliberately underpaying taxes owed * Substantially understating your taxes (by stating a tax hail on your pass away which is less than the amount owed for the income you reported). Tax Audit A tax size up is an investigation into the background o f tax returns submitted by an individual or business to a tax agency.While it is true that a tax audit may be called due to some perceived irregularity in one or more returns, it is also true that an audit may be done simply as part of a random sampling. Tax audit is when the IRS decides to examine your tax return a little more closely and verify that your income and deductions are accurate. Tax return is chosen for audit when something you have entered on your return is out of the ordinary. at that place are three main types of IRS audits the mail audit, the office audit and the battlefield audit.