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not filing taxes, San Jose tax law attorneyYou may or may not know of someone who has not filed income taxes. It may be tempting each year to not file with the Internal Revenue Service (IRS); however, such an omission can lead to serious consequences.

California Filmmaker Josh Kornbluth was one of these non-filers. He did not file income taxes for seven years in the 1990s. He stopped filing taxes one year when his tax returns got more complicated after taking on freelance writing assignments. He said that he never got caught, which caused him to continue to not file.

"The first time, I got very nervous," Kornbluth told reporters. "But then I noticed that nothing happened to me. The next day after I didn't file was the same as the day before. It just became sort of a habit not to file."

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tax preparer fraud, San Jose tax lawyerMany individuals and businesses turn to a tax preparer for the extra assurance a preparer gives that taxes will be filed properly. While most tax preparers provide a valuable service, some preparers use tax season to scam customers as well as state and federal governments.

Different Schemes Used by Tax Preparers

Tax preparers can set up schemes to defraud in a number of ways. For example, a tax preparer could claim credit or deductions for which the individual was not eligible. A tax preparer could also divert tax refund checks to his or her own bank account.

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Gamblers have been eligible to pay taxes on their winnings for years, and must pay taxes on each dollar that they win on all kinds of gambling. That includes not just slot machines in casinos, but also winnings on sports bets.

 

At a slot machine, only winnings above $1200 must be reported to the IRS. However, the Internal Revenue Service has admitted that it is toying with the idea of lowering that limit to $600. Predictably, that has generated outrage in the gambling community. It's not just gamblers who are opposing those proposals. The casino industry is also opposing that lowered threshold for reporting earnings at slot machines.

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If you are currently receiving or paying alimony, the Internal Revenue Service has its sights on you. According to the Internal Revenue Service, it will soon begin devoting more time and focus to tax claims related to alimony.

Typically, tax laws require that spousal maintenance payments that are made by one spouse to the other be claimed as deductibles by the payer. The amount is also taxable for the recipient. Basically, the person who is paying the alimony can claim it as a deductible, while the person receiving the alimony must declare it as income on tax papers. However, the Internal Revenue Service does not believe that Americans are being totally honest about the alimony that they are receiving. It believes that there is a wide discrepancy between alimony deductibles and the alimony that is claimed as income.

Earlier this year, the Treasury Inspector General for Tax Administration released a report in which it identified that there was a very large gap between deductions for alimony by people making the payments, and the income claimed on returns. The report focused on about 570,000 income tax returns in tax year 2010. It found that the deductions for alimony paid exceeded the income from alimony by more than $2.3 million. Overall, the report found that 47% of the tax returns that were analyzed had some discrepancy between the payments.

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Posted on in Tax Audits

According to news reports, many physicians who waited till April 13 to file taxes may have become victims of tax fraud.

Many doctors have reported being surprised when they attempted to file the taxes on April 15, and found out that their taxes had already been filed. Filing fraud taxes on behalf of another person is a simple tax fraud scheme that is fairly common. In these schemes, the person then pockets the refunds that the victim was eligible for.

This scheme is fairly simple to operate. The fraudster will access a company's W-2 database, which provides all the data about employees of the firm, their earnings, as well as personal data. With all that information, a person can find it very easy to file returns on behalf of the employee. In fact, some fraud schemes use fraud software that actually automates fraudulent and tax return filing. Some payroll systems are much more vulnerable to hacking than other types of systems.

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