How is tax fraud committed?

Tax fraud is the intentional act of evading taxes or claiming false deductions or credits that result in the reduction of ones tax liability. It is a white collar crime in South Dakota and is prosecuted under state and federal laws. The most common form of tax fraud is filing a false income tax return. A person may provide false information such as hiding income, claiming false deductions, or misrepresenting expenses in order to reduce their taxable income and with it their tax liability. Tax fraud also includes underreporting one’s income. This occurs when a person neglects to report all of their income, such as employment income, investment income, or rental income. In addition, tax fraud may involve claiming false tax credits. This includes claiming a dependent that does not exist, claiming a tax credit without the qualification to receive it, or claiming child care that was not actually used. Finally, individuals or businesses may commit tax fraud by not paying their taxes. This includes failing to file their taxes or to pay taxes in a timely manner, which can result in significant penalties such as fines, wage garnishment, and even imprisonment. In short, tax fraud is committed when a person or business attempts to evade or reduce their tax liability through the intentional misrepresentation of their income, expenses, or credits. This crime is punishable under both state and federal laws in South Dakota.

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