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Crime Does Not Pay – Save on Taxes the Legal Way

By TaxWealth -

It distresses me to see a continuing stream of headlines in the financial media about tax cheats. Just recently two headlines popped into my e-mail inbox that led me to unsettling stories about people within our tax bureaucracy who clearly felt the need to “game the system” and thought they could outwit their fellow administrators.

The first article was about a former U.S. Tax Court Judge and her husband who were recently charged  with obstruction of justice in concealing key documents from auditors and investigators regarding an audit and “conspiring to cheat on their taxes” over a 10-year period.  Per the indictment and documents filed in court, they had understated their taxable income by $1 million.

It is anyone’s guess, of course, what would possess the judge to do this.  Perhaps she had overseen so many trials that dealt with cheating that she became desensitized to it. Or, maybe she thought she knew the tax system so well that she could “cut corners” and not get caught. Whatever her reasoning, the $400,000 in taxes she and her husband thought they would be “saving” by taking hundreds of thousands of dollars in illegal deductions ended up leading them straight to their ruin.

The other case I read about is equally troubling because it clearly involves someone working within the system who thought that she could outsmart it.

A CPA and former IRS special agent who served for eight years as an IRS criminal investigation agent, was indicted by a federal grand jury in Sacramento, CA on charges that she filed false tax returns for herself and her family.  Allegedly, she also made false statements to investigators to obstruct the investigation into her case.

Why cheat? The IRS tax code has plenty of legal benefits to go around.

Trying to cheat the tax system never pays, and doing so is always unnecessary. The U.S. tax code is filled with legal mechanisms for saving money on taxes.   Doesn’t it make more sense to simply do what tax law says you can do to gain great deductions and exclusions?

By applying the law correctly, my own clients have saved hundreds of thousands of dollars in taxes when real estate, a business or some other capital asset was sold.  Business owners have also obtained multi-thousand-dollar tax savings by simply matching up the character and timing of their expenses to legitimately capture more in deductions.  And in other instances, tax law was applied to recoup taxes paid in previous tax years.  One manufacturer, for example, got back more than $100,000 in taxes he had paid over the past three years because he finally applied the right tax law to his circumstances.

Cheating the system is like a two-edged sword.  It may be the fastest and cheapest way to save taxes, but it can also be the quickest way to jail!  By contrast, it is worth the expense to find out the legally available possibilities you have. The fee you pay to hire a seasoned tax planner who has the knowledge to find these tax benefits is usually only paid “on success.”

At TaxWealth, for example, we offer a complimentary Second Opinion Tax Diagnosis™ of the taxpayer’s tax returns to identify missed planning opportunities and taxes that are being paid that don’t have to be. We also pinpoint the amount of tax savings that tax law confirms is available, and then quote our fee to prepare the formal Tax Reduction Plan to obtain these tax benefits. The taxpayer can then weigh the tax benefits against the fee to determine if the amount of tax savings warrant them moving forward with the plan we recommend.

Give us a call and let’s explore together how rewarding the legal approach in tax planning can be for you!

 

 

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