TAX TIP OF THE DAY... Stay out of jail.
Everyone jokes about the IRS and their inefficiency. However, the IRS Criminal Investigation (CI) unit is very successful at prosecuting tax cheats. Their main targets are small businesses under reporting sales. If they knock on your door, you need a criminal attorney because you are going to jail. They watch you for months and collect evidence. By the time they knock on your door, they have the evidence to convict you.
Small business owners... blatant cheating may put you behind bars. Don't do it. It's not worth it. USE THE MANY LEGITIMATE TAX DEDUCTIONS INSTEAD! I can help you with that part.
This is how tax cheats get caught:
1) bank tellers are required to report certain high dollar cash deposits to the IRS.
2) bank tellers sometimes report lower dollar cash deposits to the IRS on a "Suspicious Activity Report"
3) an anonymous tip from the IRS Fraud hotline
4) IRS under cover operation... posing as one of your customers.
5) your lifestyle (cars, house, vacations) does not match the income reported on your tax returns.
6) IRS is contacted by former spouse, former co-worker, former neighbors... lots of people know.
7) Your reported income and expenses don't align with similar businesses in your industry.
8) You are in an industry known for cash transactions, but you report very little income in excess of credit card transactions.
Hopefully this post scared you a bit.
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If you need any help... www.baboiancpa.com