Tax Evasion - Accounting Fraud

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.

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