The recent global financial crisis has resulted in tax fraud and tax evasion becoming a more common problem. Many tax cheats have found that it is now far easier to dodge the Internal Revenue Service than ever before. In some cases, according to a tax lawyer VA, illegal tax evasion strategies have been used to gain unfair advantages over financially strapped banks and other creditors. Because of the huge number of tax cheats that end up in jail, it is essential for everyone to be aware of how to stay out of legal trouble. One of the best ways to avoid being accused of tax fraud or tax evasion is by hiring a tax law attorney. Learn more about tax and the role of tax lawyer by clicking here.
In United States, there are many banks that have come under fire from the federal government and the media because of their lax lending policies said an expert from tennesseetaxattorney.net. Banks were given ample time to prepare and report tax statements that would make sure they did not violate any of the laws that have been enacted to protect the financial system. If the banks had not done these things, the resulting fallout could have been much greater. Instead of a few people having to suffer, several thousand would have fallen victim to tax fraud and evasion.
There are many ways that banks can commit tax fraud and evade the full extent of the law. For example, if a bank allows a low minimum deposit amount that a person needs to open a checking account with in order to receive a debit card, that money is never reported to the IRS. The bank skips out on its responsibilities to the Internal Revenue Service by not reporting the missing funds. This allows the person who receives the card to incur credit card debt, interest, and penalties without paying the appropriate taxes.
A similar scenario might be an employee who does not follow through with reporting his or her earnings from working off-site for the company. The bank will report the employee’s earnings, but the amounts may be small. After tax season, the justice department can file a tax fraud lawsuit against the employer. Even though the employee did not report the income, the bank uses the lack of declaration as an excuse to deny payment. The case ultimately ends up being transferred to the government because the bank’s refusal to acknowledge it was a crime makes them liable for criminal charges.
Many banks use corporate clients as part of their efforts to avoid tax evasion liability. To encourage proper tax reporting by corporate clients, the Internal Revenue Service enforces complex tax laws. In addition, companies have to regularly update and track all tax filings. Failure to comply can result in severe penalties.
Tax fraud costs different amounts. It costs a bank twenty-five thousand Euros to avoid paying taxes. A company with one hundred employees pays a million Euros to the tax office. For the bank, the cost is less than two percent of its annual revenue. A group that has a few thousand members, however, pays hundreds of thousands of Euros to the bank to avoid tax evasion.
No matter how large or small the company, tax evasion hurts the bank. The fines that companies pay do not make up the millions of Euros that banks lose because of tax evasion. Even the fines that companies pay to the government don’t make up the six million Euros that banks lose because of tax fraud. The maximum fine that a bank will be forced to pay is three million Euros, but even that might be an overkill if the tax evasion has cost them ten million Euros or more.