Venar Ayar, IRS Proof of Tax Fraud
Methods of Proof of Tax Fraud

When the IRS decides to pursue a criminal tax investigation into a taxpayer, it is typically because they believe said taxpayer has committed some sort of tax fraud. Usually that is underreporting of income, overstating their deductions, or not reporting certain income at all.  In order for the IRS to prove their case they use specific methods to analyze the situation.  They use either direct or indirect methods of proof.

Direct Methods of Proof

Initially, when trying to determine if tax fraud occurred, the IRS may rely on direct proof or specific items to prove their case rather than looking at the taxpayer’s entire financial picture.  Here, they pick apart specific transactions to see if the taxpayer earned more money than they reported on their tax returns (mostly).  They could also be out to prove that the taxpayer claimed deductions, expenses or credits that they shouldn’t have.  The IRS will typically interrogate those closest to the taxpayer or anyone who might have direct knowledge about the issue at hand such as their spouse, their accountant (remember, whatever you share with your accountant is NOT privileged), their employees, etc.

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