Fraud is a deception deliberately practiced to secure unfair or unlawful gain. In Indiana, taxpayers are bound by a legal duty to file a tax return and to pay the correct amount. Failure to do so by falsifying or withholding information is against the law and constitutes tax fraud.
Examples of Tax Fraud
Tax fraud occurs when an individual or business entity willfully and intentionally falsifies information on a tax return to limit the amount of tax owed. Tax fraud essentially means cheating on a tax return in an attempt to avoid paying the entire tax obligation. Examples of tax fraud may include, but are not limited to:
- Deliberate failure to file all types of tax returns
- Deliberate failure to report all income received during the tax year
- Made false or fraudulent claims for refunds
- Claiming to be a resident of another state while living in Indiana with the intention of evading taxes
- Overstating the number of children or other dependents on an individual income tax return with the intention of evading income taxes
- Prepared documents, books and records that understate the true income or overstate the expenses of a business and with the deliberate intention of evading tax
- Failed to maintain records that show the true income and expenses of a business in an attempt to evade taxes
- Overstated expenses to reduce income in an attempt to evade taxes
- Selling of imported beer, liquor or wine and deliberately failing to pay the excise tax on these products
- Filing an Indiana sales tax return deliberately omitting sales tax transactions on which sales tax was collected
- Sales of imported cigarettes and other tobacco products without payment of the excise tax in a deliberate intent to evade paying those taxes
- Paid cash to employees for the purpose of evading Indiana withholding tax
- Opening and closing of new businesses to evade taxes
- Operated a business using someone else’s name to evade business and income taxes
- Misrepresented or omitted data on a tax return deliberately
- Continued to operate business even though they are not allowed because they have not paid taxes to the state
- Ignored the requirements to report and pay use taxes on goods imported into the state
Tax Delinquent Businesses
Indiana law requires the Department of Revenue to list online all retail merchants whose Registered Retail Merchant Certificates (RRMCs) have expired. This can result from nonpayment of delinquent sales tax. If a business continues to conduct retail transactions with an expired RRMC, it is tax fraud.
Any delinquent business that has had their Registered Retail Merchants Certificate revoked can be found at www.in.gov/dor/4335.htm.