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Types of Tax Crimes and How to Avoid Them

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Like most other people in Missouri, you don’t want to pay one penny more in taxes than is absolutely necessary. In your pursuit of a way to do just that, you may have come across what you think might help you meet your goal.

You may have become involved in what someone told you was a legal way to avoid paying taxes on certain funds by keeping them in an offshore account, only to find out that the IRS has you under investigation for participating in an abusive offshore tax scheme.

Schemes and entities

When someone promoting a particular tax shelter approached you, he or she most likely told you that it would be legal to put your money into one of the following:

  • Related-party loans
  • Foreign trusts
  • Offshore bank accounts
  • Offshore credit cards
  • Foreign corporations
  • Captive insurance companies
  • Foreign limited liability companies and limited liability partnerships
  • Personal investment companies
  • International business companies
  • Private banking both offshore and in the U.S.
  • Offshore private annuities

If you moved your hard-earned money into one of the above, you could very well find yourself under scrutiny by the IRS. You may have thought it was legal, but you may be in a gray area that draws attention to you. Another reason why you may not have considered what you were doing as a tax crime is that tax shelters and shady offshore accounts are only for the rich, are they not? That’s not always the case.

As the internet has grown, so has the number of middle-class individuals encountering this issue, according to the IRS. The fact that the amount of money you moved offshore is nowhere near what a “rich” person would move makes no difference.

If you find yourself under investigation

If you discover that the IRS began an investigation into you based on an alleged abusive offshore tax scheme, don’t ignore it or wait until the government files charges against you. The time to begin protecting your rights and building a defense is now. If convicted of a tax crime, you would lose your freedom for a significant amount of time, along with a substantial amount of money.

Because so many middle-income taxpayers are participating in what they believe to be legal tax shelters, the IRS wants to recoup the monies it feels those taxpayers owe. Tax controversies may seem like “no big deal,” but considering that Al Capone ended up going to prison because of a conviction for tax crimes, that simply isn’t true.

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