FInal Study Guide.docx - Class note that a double set of books is an example of tax evasion Also destroying records is a good example of tax evasion So

FInal Study Guide.docx - Class note that a double set of...

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Class, note that a double set of books is an example of tax evasion. Also, destroying records is a good example of tax evasion. So, to recap, in proving tax fraud, the IRS relies on determining what the taxpayer's mens rea is and looks for conduct that may determine illegal tax evasion. The following are some relevant examples: keeping two sets of books or records, especially in a cash-based service business, which could lead to concealment of income; consistently making false or erroneous bookkeeping entries; creating false documentation to support false bookkeeping or tax records; knowingly providing false information to a tax return preparer; not maintaining records or destroying records; storing or receiving deposits/assets in a different name or business form; falsely claiming an exemption from tax liability; and systematic failure to file tax returns. Intent is necessary for tax evasion. IRS CIRCULAR 230 DISCLOSURE Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting, marketing or recommending to another person any tax-related matter. Please contact us if you wish to have formal written advice on this matter. Tax avoidance is the ability to lower ones taxes before a taxable event occurs. Tax evasion on the other hand occurs when a tax liability exists and is not reported as required by law. Also noted was that tax evasion must be the principal purpose. Also, the taxpayer is not guilty of tax evasion just because the tax consequences are considered. There is a fine line between tax avoidance and tax evasion. The intent of the taxpayer should be evaluated as well. Now, tax avoidance may be considered as either the amoral dodging of one's duties to society, part of a strategy of not supporting violent government activities or just the right of every citizen to find all the legal ways to avoid paying too much tax. Tax evasion, on the other hand, is a crime in almost all countries and subjects the guilty party to fines or even imprisonment. Switzerland is one notable exception: tax fraud (forging documents, for example) is considered a crime, tax evasion (like not declaring assets) is not." When it comes to sources of guidance these sources can be categorized into primary and secondary sources. "Primary sources of federal law are documents issued by a branch of the federal government or by a federal agency. When providing support for a position, primary sources carry more weight of authority than secondary sources." "With respect to federal tax law, primary sources that carry a high weight of authority include the following: Internal Revenue Code Other non-codified Federal tax statutes Final and temporary regulations Judicial decisions on tax matters Revenue Rulings Revenue Procedures Other published IRS positions (e.g., Notices and Announcements)
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