What is corporate tax evasion?
There are a variety of ways for businesses and corporations to partake in IRS tax evasion. The end result hurts two parties: the federal government, and the individual employees. The federal government suffers due to loss income. The individual employees suffer due to decreased funding of their future social security and/or Medicare benefits.
Failure to file. When employers fail to file payroll and employment tax returns, they are committing tax evasion. By not filing a payroll tax return, the IRS will have no record of how much the business owes in taxes.
Filing false payroll tax returns. If an employer files payroll tax returns reporting the improper amount of wages that taxes are based on, this can be viewed as tax evasion by the IRS.
Pyramiding. This tax evasion scheme involves employers withholding payroll and employment taxes from the employees paychecks, but not reporting or paying the taxes to the IRS. Usually, the company will do this for a while, accumulate the liabilities, and then just file for bankruptcy. Upon filing for bankruptcy, the payroll tax liability is discharged. Once this happens, the company will open up under a new name and start the process all over again.
Outsourcing/Employee Leasing. When an employer hires an outside firm or individual to do certain company tasks, this process is known as outsourcing or employee leasing. In and of itself, it is a legal practice/business. For instance, instead of the company doing its own payroll or administrative tasks, they ‘outsource' an independent firm to do the payroll processing work. However, employee leasing and outsourcing have been known to be involved a tax evasion scheme. The independent firm prepares payroll, withholds the employee taxes, but does not submit the taxes to the IRS. This is a form of tax evasion, and is one known scheme used for this purpose.
Paying in cash. Paying employees and business vendors in cash is a common way for employers to avoid paying both income and payroll taxes. Usually employers who operate via the cash transaction route, will not report any payroll tax withholding to the IRS, since they do not withhold any taxes from the employee's pay.
Tax Relief Frequently Asked Questions
What is one IRS Penalty?
Is there a penalty for not reporting my social security number?
What is the IRS penalty for not filing my tax return?
What is a frivolous return?
Is there a penalty for paying taxes late?
What is an example of a tax evasion case?
What is tax fraud?
What is tax evasion?
What is innocent spouse relief?
Can I see an example of innocent spouse relief?
When does innocent spouse relief not apply?
What form do I need to request innocent spouse relief?
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What are some innocent spouse relief rules?
Am I eligible for innocent spouse relief?
Where do I mail my IRS Form 8857?
What is corporate tax evasion?
What are some payroll taxes?
How about an actual case about corporate tax evasion?
What are some fringe benefits?
What is tax relief from a tax loss?
How can state taxes paid provide tax relief?
What is some small business tax relief?
What happens with unpaid payroll taxes?
What is an automatic IRS installment plan?
What are some documents needed for payment plans?
What is the drawback to an IRS installment plan?
What if I fall behind in my tax payments?
How can I make payments on my IRS payment plan?
What form do I need for requesting an IRS installment plan?
How do I request an IRS Payment plan?
What is an IRS tax installment agreement?
What are the guidelines for applying for an OIC?
Be weary of what?
Are there examples of OIC case studies?
How do I calculate my OIC offer?
When can I apply for an OIC?
What is an offer in compromise?
What are the procedures for an OIC?
What is an uncollectible account?
What are back property taxes?
Where can I get federal tax lien information?
What is a release of federal tax lien?
What is a notice of federal tax lien?
What property can be subject to a tax lien?
What is the tax lien process?
How do I perform a tax lien search?
What is a high risk taxpayer for tax liens?
What is a tax lien?
What assets can be levied?
How do I appeal an IRS levy?
What is a bank levy?
What starts the levy process?
What is a Notice of Levy?
How can I release a tax levy?
What is a state tax levy?
What is the difference between a tax lien and levy?
What is a wage levy?
What are some high risk trigger areas?
What are some IRS audit red flags?
Can I represent myself during an audit?
How long does the IRS have to audit me?
How do I prepare for my IRS audit?
How do I protect myself from an audit?
What is the IRS Taxpayer Bill of Rights?
What are some types of IRS audits?
How do I appeal a wage garnishment?
Can I see a wage garnishment case?
What is a wage garnishment?
What is a IRS warning?
What if I am self-employed?
How do I stop wage garnishment?
How do I release a wage garnishment?
Why do I have a wage garnishment?
What is my responsibility with wage garnishments?
How can an amended return give me tax debt help?
What is bankruptcy?
What is the debt calculator?
What is state tax debt?
What is a tax debt help mistake?
Who is a tax debt pro?
What is the Taxpayer Advocacy Services?
What is an uncollectible category?
What is a back tax form?
How do I file back taxes?
How do I pay back taxes?
What is the IRS statute of limitations?
What if I didn't receive a W-2?
What are the penalties for not filing my return?
What is a special situation regarding back taxes?
What is the IRS statute of limitations for back taxes?
What about the IRS & Substitute Tax Forms?
What is a penalty abatement?
What is an example of a penalty abatement?
What is a reasonable cause for penalty abatement?
How do I request a penalty abatement?
How do I request an interest abatement?
What is a penalty abatement request letter?
What about penalty abatements?
What if I rely on IRS incorrect advice?