Why do so many people think they can get away with Tax Evasion? (student loan, contractor)

[tarragon]

Originally Posted by Mr.Hospitality

People cheat because it's hard to catch everyone.

I agree! I know a business owner who writes off all of his personal expenses to his office that is not part of his home address! It's insane that he has never been audited!

[Lillie767]

Originally Posted by tarragon

I agree! I know a business owner who writes off all of his personal expenses to his office that is not part of his home address! It's insane that he has never been audited!

How Do You Report Suspected Tax Fraud Activity?

https://www.irs.gov/individuals/how-...fraud-activity

[athena53]

Originally Posted by mascoma

I'm trying to figure out a way to get my cat a social security number so I can claim her as a dependent. I'm sure other people have done it but I've never heard of anyone getting caught.

According to the book "Freakonomics", a large number of "children" disappeared from the tax records after SSNs were required.

I'm in the wage slave group- some of my deductions were higher than average for my income (mortgage interest back when I lived in NJ, charitable deductions most years) but I never was audited. They would have been easy to substantiate other than the food bank donations- you can save grocery receipts and claim that you dropped them off at the donation barrel at your church or the local grocery store but you have no proof. Not a lot of money to be made there, though.

And a friend who worked for a nonprofit told me that before they changed their policy, people would pretty much pull up in a truck with all the stuff they took out of Mom's house after she died- Christmas decorations, used underwear, half-used containers of food and toiletries- and "donate" them. At least if you donate a car you're now limited to what the charity got when they sold it.

Originally Posted by RageX

It was $1,400. They said pay. I paid, didn't give a lot of backtalk. They originally said $4,600 but, I told them it's not possible I bought MCD at $0, I bought at $96 sold at $99 (plus some AMZN gains). So they checked, 2 to 3 minutes, then said $1,400.

I had something similar happen once- had been moving $$ in and out of a money market fund in my Cash Management account and forgot to report it. The "proceeds" (i.e. every check I wrote on the account) were reported to the IRS. The basis was not, so they just used zero as the basis and taxed me on the entire proceeds. I got that gain reduced to close to zero. I wonder sometimes if this is how some of the "success stories" the firms on TV had such happy endings.

I agree that the ones the IRS goes after are businesses that are mostly cash, people who don't file at all, and those who don't file numbers consisted with what's on their 1099s, W-2s, etc. The typical wage slaves don't really have that many opportunities to cheat.

[Grlzrl]

Originally Posted by Azureth

They ALWAYS get caught, and get a stiff prison sentence, why are there people that think they can get away with it? I mean heck, in our current system Tax Evasion is treated far worse than rape, murder and genocide, so just how stupid does one have to be to do it?

Where are all these people getting away with it? I would say mostly it's illegals who evade taxes.

[Grlzrl]

Originally Posted by jlawrence01

General observations:

1) If your income is largely verifiable (1099, W-2) and your reported numbers exceed the sum of the reported income, you will generally not be audited.

2) If you are making less than $100k, you are probably not going to be audited.

3) Failure to file is a biggie and will generally be caught down the road,

4) Filing frivolous returns will also lead to serious trouble.

5) Failing to pay withheld payroll taxes (or to be an officer of a company that fails to pay will get you shut down and arrested very quickly.

6) Filing falsified returns as a tax preparer or facilitating such will lead to a quick prosecution.

7) Making a garden variety error that is eventualy caught will result in an assessment of back taxes and a small penalty and interest. Often the penalty is waived.

==================

In general, compliance with tax laws in the US is very high compared with other Western democracies.

This is true. European compliance is lower. I read an article on a flight magazine back around 2013 that said that 1/3 of cars traveling over EU borders were carrying Euros for evading taxes. As tax rates go up, compliance goes down.

[rothbear]

Originally Posted by Hemlock140

People think they can get away with it because they do.

In fact, there is an entire industry of companies who will help you eliminate your overdue tax burden. I'm surprised you haven't seen or hear their commercials on TV/Radio. The rest of us that pay our taxes are subsidizing those that use this kind of service successfully.

https://www.nationaltaxdebt.com/irs-...caAllOEALw_wcB

https://www.taxreliefcenter.org/l/Ba...oaAmsQEALw_wcB

https://www.taxdefensenetwork.com/bl...eness-program/

These ads really burn my buns. These companies should be illegal. Why should people get away with getting their taxes cut when the rest pay. I realize the IRS figures that something is better than nothing but that's just excusing these cheats who owe 10's of thousands of dollars. They know they owe it.....PAY IT!!! That's as bad a some people who just file bankruptcy to get out of paying their bills (not everyone mind you....but face it, some people do).

[hikernut]

It's impossible to keep tabs on millions of small businesses, owners of rental property, and anyone else who has income that's not reported by another entity (1099, W-2, etc).

My dad was a farmer, and I remember him commenting after a tax audit about how simple it would be to cheat.

[Wo1234]

Originally Posted by hikernut

It's impossible to keep tabs on millions of small businesses, owners of rental property, and anyone else who has income that's not reported by another entity (1099, W-2, etc).

My dad was a farmer, and I remember him commenting after a tax audit about how simple it would be to cheat.

Most people never get caught, I literally saw one person put a fake “business “ with huge losses that offset his w2 income , he did that for aLmost ten years , free money from uncle sugar. Even after he was audited due to statutes he came out ahead

[mshultz]

Originally Posted by tijlover

I view it differently. A very wealthy man can well afford to hire the best tax consultants money can buy, to get his tax load down as low as possible, sometimes to near zero!

In my eyes, that's tax evasion of the worst kind!

In the 1950's, when the tax on the rich was 90%, how many rich people came even near to paying it?

Ronald Reagan was under that tax system in the 1950's and he managed to buy a nice home in Pacific Palisades and a ranch in the San Fernando valley. Question is, how much money did he spend on a tax consultant to get him to evade paying taxes?

The top marginal tax rate was 90%, not the overall tax rate. What happened is that when people's income approached the 90% marginal rate, they stopped working. Elvis was said to have paid more in income tax in 1956 than any other American. While everyone else refused to work for $0.10 on the dollar, Elvis continued to sell records.

Also, land was a lot cheaper back in the 1950's, even when adjusted for inflation. I am finding that replacing the house and 15 acres I have is basically not doable with the huge increase in land values since 1986. And this is looking in low-cost areas, not California.

[1insider]

We are currently experiencing very low rates of audits, only .4% of returns.