what is tax fraud

Tax fraud occurs when an individual or business entity willfully and intentionally falsifies information on a tax return to limit the amount of tax liability. It essentially entails cheating on a tax return in an attempt to avoid paying the entire tax obligation. Examples of tax fraud include claiming false deductions, claiming personal expenses as business expenses, using a false Social Security number, and not reporting income. Tax fraud is more than just a mistake; it is a willful attempt to get out of tax obligations. It is a deliberate attempt to evade taxes or to defraud the IRS. Tax fraud is a crime in almost all developed countries, and the guilty party is liable to fines and/or imprisonment. When dishonest people fail to pay their fair share of taxes, it has a negative impact on businesses, consumers, and the performance of vital state services.