- May 16, 2024
- Kelvin Birk
- Tax Law
No one likes to pay taxes, but taxes are necessary in order for governments to have the funds needed to provide essential services to the public. When people commit fraud in an effort to illegally avoid paying their fair share of taxes, it cheats the government of necessary funds and undermines the integrity of the system. For this reason, in Missouri, as in the rest of the United States, there are strict laws in place to combat tax fraud and specific ways to report it if you suspect it is going on.
Who Must Pay Taxes?
In Missouri, both individuals who are residents or earn income in Missouri and businesses that operate in Missouri are required to pay taxes based on their income, property, and transactions. Missouri has a progressive income tax system, meaning that higher income levels are subject to higher tax rates. Property owners are required to pay property taxes on real estate they own. Individuals and businesses that sell goods or services in Missouri are generally required to collect and remit sales tax, and buyers pay use tax on items purchased out of state and used in Missouri. In addition, there are some specialized taxes, such as excise taxes on goods like alcohol and tobacco.
In the United States, citizens, residents, and businesses are all required to pay taxes on income and profits. There are also excise taxes to be paid on specific goods and activities, such as alcohol, tobacco, gasoline, and luxury items. Estates and trusts may be subject to federal income tax on their earnings, and their beneficiaries may also have tax obligations on distributions.
What is Considered to be Tax Fraud?
Tax fraud involves intentionally providing false information to evade paying taxes owed. This can include practices such as underreporting income, inflating deductions, hiding money in offshore accounts, or engaging in other deceptive practices to manipulate the tax system.
According to the Internal Revenue Service (IRS), tax fraud includes the following practices:
- False exemptions or deductions
- Kickbacks
- A false or altered document
- Failure to pay tax
- Unreported income
- Organized crime
- Failure to withhold
- Failure to follow the tax laws.
Missouri Laws on Tax Fraud
Missouri has its own laws addressing tax fraud, which are enforced and investigated by the Missouri Department of Revenue. These include laws relating to income tax, sales tax, withholding tax, motor fuel tax, cigarette tax and tax on other tobacco products, driver’s licenses, vehicle titling and registration, motor vehicle dealers, and license offices.
Penalties for tax fraud in Missouri can include fines ranging from thousands to millions of dollars, imprisonment, or a combination of both, depending on the amount and circumstances involved in the fraud. The Criminal Tax Investigation Bureau conducts criminal investigations in the area of sales, withholding, and income taxes and also investigates property tax credit fraud and political candidate affidavit complaints.
U.S. Laws on Tax Fraud
Tax fraud is also a federal offense in the United States, and is investigated and prosecuted by the Internal Revenue Service. Under IRC § 6663, violators must pay an amount equal to 75% of the portion of the underpayment, if this is shown to be attributed to fraud. In addition, federal prosecutors may assess criminal charges for fraud.
Under IRC § 7201, any person who willfully attempts to evade or defeat taxes can be charged with a felony. Penalties if convicted include up to $100,000 in fines ($500,000 in the case of a corporation), up to five years in prison, and the costs of prosecution.
Other criminal tax crimes may involve:
- Willful failure to collect or pay over tax
- Willful failure to file a return, supply information, or pay tax
- Fraudulent statement or failure to make statement to employees
- Fraudulent withholding exemption certificate or failure to supply information
- Fraud and false statements.
In addition, criminal charges may also be bought for assisting someone in committing tax fraud.
How to Report Tax Fraud in Missouri
If you suspect an individual or business of tax fraud, you can report tax fraud by contacting the Missouri Department of Revenue or the IRS online, and you can do this anonymously. The Missouri Department of Revenue does not offer rewards for reporting fraud.
To report tax fraud to the IRS, fill out the Form 3949-A, Information Referral, and submit it online or by mail. In some federal cases, you may receive a reward for providing information about tax fraud by filing Form 211. Application for Award for Original Information.
Get Help with Tax Fraud Accusations
While reporting suspected tax fraud is easy to do, it is a different situation to find yourself facing tax fraud accusations. With charges taken so seriously and penalties so severe, it is important to get guidance and legal assistance from an experienced attorney who knows how to deal with tax codes, laws, and cases.
Attorney Kelvin Birk, based in Cape Girardeau, Missouri, is a Certified Public Accountant as well as a lawyer. He has more than 30 years of experience in accounting and tax and business consulting and more than 20 years of experience in a wide range of legal matters. This combined expertise allows him to provide a unique perspective to handling tax cases and a high level of service. When you have the Birk Law Firm fighting for you, we will provide guidance on navigating the complex legal landscape involved with tax laws, protect your rights, and represent you in legal proceedings and negotiations with tax authorities to help achieve the best possible outcome for your case.
Attorney Kelvin Birk
Kelvin Birk is a lawyer as well as a certified public accountant, with more than 30 years of experience in accounting and tax and business consulting, and more than 20 years of experience in numerous legal matters. This combined expertise allows our law firm to provide a level of service above that of other firms. Whatever your legal situation, your attorney at Birk Law Firm can counsel you as to the tax implications. We have experience in providing myriad legal representation services to residents of southeast Missouri and other areas.. [ Attorney Bio ]