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Will dwindling IRS funds reduce tax-fraud prosecutions?

No one enjoys paying taxes, and very few people pay taxes because of a sense of goodwill or basic morality. Generally, people pay taxes because they're afraid of the consequences of being caught for not paying taxes.

For the vast majority of Americans, this is the primary reason for paying taxes: we would be in serious trouble if we didn't pay taxes. But what if this premise was questionable? What if the IRS is losing its manpower and its capacity to investigate and prosecute instances of tax fraud or tax evasion? If the government focused only on the big fish -- tax fraud against major corporations -- would individuals and small business take more risks in their tax returns?

Government Focused on Bigger Fish

As the IRS is losing its resources, it is focusing more on prosecuting major violations from larger corporate entities than on mom and pop tax avoiders, according to an article in Forbes online.

So how does the IRS keep people paying taxes? If the resources for investigating and prosecuting small-time tax violations from small companies and individuals, what incentive do people have to continue paying taxes?

According to the article, "Unless (or until) staffing is increased, IRS Criminal Investigation will pursue high impact cases to make taxpayers all over the country remember that Uncle Sam is looking for taxpayers whom it believes are intentionally violating the tax laws just as they did with Caterpillar."

The idea is that by prosecuting major, high profile cases, the IRS will keep regular people in fear so they will keep paying taxes.

Not Paying Taxes is Still a Numbers Game - and Still a Significant Risk

Many small businesses and individuals could see this development as a tempting opportunity to fudge some of the numbers to minimize tax liabilities. But this is a bad idea. Even though there are fewer resources focused on small time tax fraud and evasion, they are still out there.

The best bet is always to pay your taxes, because the legal consequences of tax fraud charges can be catastrophic for you personally and professionally. Protect your long term interests by staying above board and filing your returns as correctly as possible, and contact an attorney right away if you are charged with some kind of tax crime.

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Will dwindling IRS funds reduce tax-fraud prosecutions? | Frank A. Rubino, Esq.