Finding out about tax Fraud

October 18, 2017

Did you know criminals file thousands of fraudulent Indiana tax returns each year which reduces the amount of revenue collected by the state for essential programs? Tax fraud and identity theft also directly takes money out of Hoosiers’ pockets through missed tax refunds, unauthorized bank withdrawals, damaged credit reports and the time spent fixing the problem.

What is 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. Basically, it’s cheating on taxes, and it hurts us all by decreasing money available for essential local and state services. Plus, fraud hurts honest business owners and individuals who pay the correct taxes every year.

Tax Preparation Fraud
Taxpayers can commit fraud by using a dishonest tax preparer. Unfortunately, dishonest tax preparers may try to:
• File a return using a taxpayer’s financial information without consent
• Inflate expenses, claim false deductions, claim bad credits or excessive exemptions
• Alter a taxpayer’s return without consent
• Provide a taxpayer a fake or different copy of their return
• Steal refunds by directing them to a different bank account
• Promise refunds that are never or only partially received
• Send fake refund checks

Therefore, it is important that taxpayers review their returns carefully. For tips on finding a tax preparer visit the department’s Professional Tax Preparers website.

Other Examples of Tax Fraud
Tax fraud materializes in many ways. Some common examples include not paying all types of taxes, not reporting all income received during the year and creating false records that overstate expenses. For a thorough list of tax fraud examples, visit our tax fraud definition page.

Reporting Tax Fraud
If you are aware of a tax preparer who is preparing fraudulent returns, someone who is not reporting all their income, or of a business who is still operating with an expired Registered Retail Merchant Certificate (RRMC), then the department asks you to report it as soon as possible.

Consumers can report fraudulent taxpayers easily and anonymously online through our tax fraud information referral, or by calling the 24-hour Indiana Tax Fraud Hotline at (317) 232-2271.