Accountant Town

What is tax evasion?

Ever since the yester years, the issue of tax evasion has been a critical thing that the authorities had
to deal with. This is because the act denies the respective authority from acquiring the monies that it
will use to facilitate the provision of services that the people depend on. Tax evasion is a method that
is commonly used by individuals as well as companies who try to shield themselves from paying taxes
by all means possible. This basically means that they will in turn keep all the profits they have made to
themselves and this can be quite lucrative and you will want to keep doing it over and over again.

It should be noted that tax evasion is quite different from tax minimization as this specific case means
that you do not pay any tax at all. The same trickery methods are used to shield the tax bracket but
those opting to minimize tend to play safe so as not to raise any suspicion. Tax evasion basically requires a lot of experience as well as an understanding of how the tax regulators operate so as to know which tricks to use and the loose ends that will need to be sealed.

How tax evasion is done

Tax evasion can be conducted at very detailed patterns that usually go undetected. It can generally be
conducted by the individuals, trusts, corporations and other money making entities. It should also be
noted that this is a deliberate action of concealing the true amount of your affairs to the tax authorities and this is what makes it illegal. It involves a lot of dishonest tax reporting so as to cover up the monies that will be pocketed by those involved. It requires a lot of cover up using falsified paperwork and distorting the cash receipts, the value of business transactions among other methods of hiding the true profits received.

How tax evasion is detected

Other than detailed methods that involve a lot of effort, tax evasion can be revealed as a result of the
actions of one principled employee who may detect these activities and report to the tax authorities.
This is probably why many countries such as the United States have created the whistle blower protection scheme which has helped to reveal such fraudulent actions. Other methods involve the use of audit systems that reveal the cover ups and the falsified money receipts and inexistent expenditures, which are some of the tricks used to cover up the con.

The consequences of tax evasion

In the United States, tax evasion lies under the Federal Crimes Act and this was the case because the
government felt that those involved should be prosecuted with serious consequences. You will not only
face the possibility of facing time in a federal prison but you will also face additional consequences such as loss of the company which can be shut down by the feds, loss of physical company assets and monies
fined as per the regulations of the federal crimes act. The consequences will however differ from one
case to another depending on the obtained evidence.

All about lapping schemes in accounting

If there is an industry that will always try to be cheeky in its everyday transactions, it has to be the world of accounting. The accountants involved are always trying to come up with their own tricks and fraud
techniques that will see them walk away with some extra money here and there. Take for instance
this specific case regarding the lapping schemes in accounting that have been known to be going on
for a while now. This has been one of the most common ways that accountants use when it comes to
handling shortages that may arise in accounts receivable payments that are made by customers.

The whole idea basically involves covering up your tracks as you wouldn’t want to be traced and found
guilty. There are quite a number of reasons why the shortages may occurs, some of which are genuine
while others are as a result of theft or even the mismanagement of cash receipts. In most cases, it’s
usually a result of theft hence the accountants result to a method of trickery in order to cover up their
tracks. The method has been known to work quite well for some people while others ended up being
tracked down. The truth of the matter is that this method of trickery is constantly being reinvented by
new and more skilled accountants.

How accounting lapping schemes are done

By understanding how the entire lapping process occurs, you will actually be surprised at how cheeky
accountants can be. For this specific case, the accountant will receive a payment of say $100 from
customer A towards her accounts. The accountant decides not to deposit the cash but he instead
pockets it for his own use. Another customer comes in with say $130 to deposit to his account. At this
time, the accountant will credit about $100 towards customer A whose money he pocketed and then
credit the current customer B’s account with $30.

The accountant will continue this process over and over again in a creative and well calculated manner
all the way up to the end of the financial period. At the end of the period when they’re reconciling
the monies, the accountant will report the loss on the financial statements and deduct it from the net
income. This is a very tricky way of covering up your theft and it takes a very brilliant accountant to be
able to accomplish this with success.

The consequences of lapping schemes

The accountants who have been known to accomplish lapping schemes with success are those that
implement a get in and quickly get out approach. This means that they use the scheme for a specific
period of time and quickly quit the practice before anyone notices any ongoing fishy business. Those
that have greed are the ones that tend to get caught. It should be noted that lapping schemes at
whatever level are illegal and those involved, together with the conspirators are usually charged with
harsh sentences. You will not only lose your job but there is also the possibility of being charged in a
court of law as per the charged and you could either face a huge fine, a jail sentence or even both in
some cases.

All about illegal shell companies

The business world is constantly seeing new fraudulent methods which people use to make that extra
buck. The tricks are constantly getting ingenious with a number of detailed facts and figures being used.
Such a good example of this is the inception of the illegal shell companies. This basically involves the
creation and sustenance of business operations that do not have any active operations, no significant
assets, no employee listings and such like items that an operational business would have. The ingenious
idea behind the shell corporations is that they are usually formed in a legal manner with the whole
registration process being followed accordingly.

It is the business operation process that the registered companies do not have and this is where the
fraud and trickery comes in. There are a number of ways in which these companies can be used in
including tax evasion, money laundering, obtaining credit and financing, making quick profits after its
sale among many other financial tricks. The trickery involved can be quite detailed and what’s even
worse is that it involves a number of conspirators coming together which can be quite difficult to trace.
It’s inception into the financial industry can be traced way back and the trends keep getting better and
better.

How illegal shell companies operate

It should be noted that the fact of the matter here is that illegal shell companies do not really operate.
Remember that these are just fictitious companies that have been formed for the purposes of
committing a number of fraudulent activities that are likely to be questioned. By forming an illegal shell
company, you limit the chances of the illegal transaction from being traced as it will just appear to be
operating as per the required guidelines of the industry. Money laundering is the major beneficiary of
these shell companies as the pretend to be doing business while in real sense, something else is going
on behind the scene.

In a nutshell, the illegal shell companies can best be described as corporations that exist mainly on
paper. This is because they have no physical presence, they employ no one and they produce nothing.
They however have been formed in a legal way and this is what makes it difficult to trace their activity.
If properly done, the shell companies can conveniently execute a number of fraudulent transactions in
billing schemes, fictitious service schemes, bankruptcy fraud, market manipulation, tax evasion, money
laundering just to mention but a few.

The consequences of illegal shell companies

A detailed audit system is one of the best ways of detecting the existence of as well as the services
conducted by any of the listed shell companies. This is usually done as a result of suspicion on a
company’s operations as well as when a whistle blower decides to inform the authorities after they
detected these activities as they go about their duties. The good thing with tracing these companies
is that there is always someone executing the services by the company’s name and this is where the
investigation begins. They will obviously be resistant at first but once they realize the seriousness of
what they’re likely to face, they are likely to crack and reveal the other conspirators in the game.