If the IRS finds a taxpayer has committed fraud, the penalty is up to 75% of the unreported tax. In one case, a taxpayer was a managing member and employee of an engineering business. He didn’t report wage income he received from the company. The IRS used the “bank deposits method” to compare his bank deposit with what was reported on his tax return. His unreported income for four years was found to be more than $680,000. The fraud penalty was assessed. The U.S. Tax Court agreed that the taxpayer showed “fraudulent intent.” Among the reasons: He concealed income, refused to cooperate with the IRS, didn’t make estimated tax payments and filed delinquent tax returns. (TC Memo 2022-33) Call or visit our website for more information! www.mjscpa.com/
