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More Americans Are Cheating on Tax Returns: Is It Too Easy?

written by: •edited by: Michele McDonough•updated: 6/30/2011

Are more people cheating on their taxes or has the Internal Revenue Service made it harder to do so with new technology catching illegal deductions or understated income? I was surprised at the statistics on the not so honest, but is the economy making creative tax reporting a necessity?

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    Stats on Cheating

    The IRS Will Find You Any time there is a recession or a down economy, it appears many of us look for ways to get more money back from the Internal Revenue Service (IRS) at tax time. According to an article by GA Ellijan on Tax Attorney Jeff Fout’s website, fraudulent returns are on the rise. In 2010, the Treasury Inspector General for Tax Administration (TIGTA)—the organization monitoring the IRS—says cheating rose a whopping 181 percent.

    I must say here, cheating on taxes is not new but as the money urgency rises for most Americans, why shouldn’t people trick the IRS here and there?

    Yes, it’s illegal and there are some ethical and moral issues here, but getting a few more bucks from Uncle Sam via cheating is not the real concern to most. It’s finding a way to keep a home, buy food or the transportation they need to get back and forth to and from work—if they even have a job.

    According to Ellijan, most people cheat by taking advantage of credits and exemptions they don’t qualify for such as the Earned Income Credit, claiming invisible kids or if they feel too honest to lie about no kids, they adopt some for the extra cash. First time buyer home credits are also abused and lastly specific hybrid gas credits such as the one for the totally electric plug-in Toyota Prius is too easy to claim even if the taxpayer bought they gas/electric hybrid instead. I mean, who’s gonna check?

    Then there are those who work as independent contractors and figure if they don’t attach a 1099 or two, the IRS won’t notice. Guess what folks? The organizations issuing the 1099s do send them in so if you do this, you will be caught. Not sure if the IRS has a copy of a 1099 or W-2 wage statement? Call them and wait and wait and wait on hold, but they can tell you what’s been received under your social security number; the phone is appropriately 1-800-IRS-1040.

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    Liberals on the Web

    IRS Troops You can find numerous Web sites (too many to list) protesting the increasing funds needed to fight two wars, send aid to countries when so many U.S. citizens can’t put food on the table or a roof over their head and how the country is broke. Some Americans want their just desserts even if that means a little white lie here and there on tax returns.

    My absolute favorite website, however, is The IRS is NOT a U.S. Government Agency put out by World Newsstand offering “wisdom and freedom" to all! Not sure who is writing all the posts (couldn’t find a name) and some links my Trend Micro antivirus program warn are “dangerous pages" but the site points out, “The Internal Revenue Service is not an agency of the United States government. It is true that not only can it NOT (IRS mention) be found in Title 31, but it is nowhere to be found in the entirety of Title 5’s United States Code." I think that’s stretching it—just a little. Sort of like The Donald (Trump) fighting and insisting to see the birth certificate for President Obama.

    They're Libertarians to be sure on this website, but if they are claiming the IRS is not mentioned in Title 31 for instance, why does the IRS offer a web page dedicated to Title 31 (see link in reference section) and the URL does start with http://www.irs.gov. If you want to visit this fight-the-IRS site, you can learn how mean and nasty Attorney General John Ashcroft is and send him a letter, read posts on “Eat This IRS" and learn about “The Fraud" of the IRS. If you feel the urge and your antivirus allows you to browse more than mine, I’d love to hear your comments.

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    New Technology

    Watch What Deductions You Claim Way back in 1997, the IRS revealed what the call their “Blueprint" on keeping taxpayers honest and they’re looking at the Blueprint in depth as of January 1, 2011. This means more checks and balances and new software programs making it harder for taxpayers to cheat on returns. So watch out people, even if it did take the government 14 years to update the system (they really can be slow), they may be on to you and will catch the fraud eventually.

    Don’t be mad here, just imagine those poor IRS reps looking at green blinking screens all day. Give them a break here! Everyone deserves the latest in technology—even government workers, right? In any event, cheating on taxes is becoming the thing to do and it’s not only the rich who own many profitable endeavors and invest in the not-so-profitable to use as deductions so no tax is due. It is also plain old American John and Jane Doe cheating—shame on us (I guess).

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    Be Afraid, Be Very Afraid

    Be Afraid Most Americans understand they must pay taxes. After all “death and taxes" have always been inevitable, but if you blatantly cheat, you will be caught—even if it take the IRS a while to review your return and find you. And yes, they will find you unless you learn how to change your identity and move to Mexico.

    Let me give you an example here on how you can never hide from the IRS. When I married by second husband, he had a life insurance policy his ex-wife cashed in. Not only wasn’t he informed (we have no idea why), but five years after the fact, because money was dispersed (cash at that) the IRS wanted their tax! So, they found us, 3,000 miles away living in Arizona and yep, they were nice and friendly and set up a payment plan but we indeed did have to pay the tax due based on the cash payout. So if you’re thinking of hiding, you can—for a while anyway—but they will catch up with you.

    I really hope here, an IRS auditor doesn’t read this and decide this chickie needs an audit ASAP! What I’d really like to know from readers is, did you get even just a little more on your tax refund for 2010 than you usually do because of a little white lie? If so, kudos to you, just watch out for those men in black and their calculators.

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    References

    Ellijay, GA (Jeff Fouts, (Tax Help Attorney) “Fraudulent Tax Returns Surge 181%" retrieved at http://www.taxhelpattorney.com/blog/tax-cheating-reaches-new-heights-new-2011-irs-report/

    Title 31 – IRS Website - http://www.irs.gov/govt/tribes/article/0,,id=139997,00.html

    Title 5 United States Code - http://www.gpoaccess.gov/uscode/

    IRS Completes New Blueprint for Modernizing Business and Computer Systems - http://www.irs.gov/pub/irs-news/ir-01-04.pdf

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