To err is human. But if you intentionally underpay taxes owed, the IRS may slap you with a fraud penalty. Such was the case in two recent U.S. Tax Court decisions against taxpayers. In one case (TC Memo 2023-149), the taxpayer willfully concealed partnership income to such an extent that he hired people to create foreign entities and falsify transfer documentation. He then filed a deceptive tax return, omitting the partnership income. The other taxpayer intentionally misreported that taxes had been withheld from a portion of his wages (TC Memo 2023-148). Both taxpayers were found liable for fraud penalties. These penalties are generally equal to 75% of the underpayment portion due to fraud. Contact us with questions.© 2023
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