DEFINITION of 'Tax Fraud'

Tax fraud occurs when an individual or business entity willfully and intentionally falsifies information on a tax return in order to limit the amount of tax liability. Tax fraud essentially entails cheating on a tax return in an attempt to avoid paying the entire tax obligation. Examples of tax fraud include claiming false deductions; claiming personal expenses as business expenses; and not reporting income.


Tax fraud involves the deliberate misrepresentation or omission of data on a tax return. In the United States, taxpayers are bound by a legal duty to voluntarily file a tax return and to pay the correct amount of income, employment and excise taxes. Failure to do so by falsifying or withholding information is against the law and constitutes tax fraud. Tax fraud is investigated by the Internal Revenue Service Criminal Investigation (CI) unit.

  1. Corporate Fraud

    Dishonest activities conducted to give an advantage to an individual ...
  2. Insurance Fraud

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  3. Association Of Certified Fraud ...

    An organization that was created to combat fraud and deception ...
  4. Tax Shelter

    A tax shelter is a vehicle used by taxpayers to minimize or decrease ...
  5. Consumption Tax

    A tax on the purchase of a good or service. Consumption taxes ...
  6. Tax Deductible Interest

    A borrowing expense that a taxpayer can claim on a federal or ...
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