Michigan taxpayers might benefit from learning the legal risks associated with attempts to cheat the Internal Revenue Service. Someone might think a fraudulent return would pass without scrutiny, but auditors and investigators may pick up on red flags that raise suspicions. Some filers might not realize that IRS could even look at social media posts to gain an insight into potential tax fraud.
Social media tells a different story
Public postings on social media may conflict with the information presented on a tax return. Suppose someone reports minuscule profits from business endeavors, but a social media profile reveals the person owns two expensive sportscars and lives in a luxury apartment. In that case, the IRS may launch an audit or a criminal investigation.
That said, the person’s tax return might be entirely legitimate. He or she may earn little from a sole proprietorship but has significant assets from an inheritance just below the threshold for estate taxes.
However, there might be instances where someone inadvertently provides evidence of wrongdoing online. Social media posts, photos, and videos may become evidence to support tax evasion charges. Someone who hasn’t filed taxes in years and posts about lavish vacations might not do him or herself any favors.
The IRS and its approach to investigations
There are several ways the IRS could gather information about someone’s alleged wrongdoings. A toll-free whistleblower line allows people to report on others. An investigation into tax fraud might be born out of such a call.
Persons paid with 1099s may not realize the IRS receives copies of such documents. Someone who doesn’t file a return might learn the IRS has details about those unreported or under-reported earnings.