- Days left

IRS Surveys Taxpayers About Cheating -- and The Results Are Hard to Believe

IRS Survey Taxpayers About CheatingIn the annals of government surveys, this may be among the silliest. The IRS queried taxpayers about whether they think cheating on your taxes is wrong. Not surprisingly, they said they do.

A mere 8% of respondents to the 2010 Taxpayer Attitude Survey said that they believe that it's OK to cheat on taxes "a little here and there," and 4% responded that it was OK to lie to Uncle Sam "as much as possible."A much larger 87% responded that they thought it was "not at all" acceptable to cheat on your taxes. Interestingly, 30% of respondents said "it is everyone's personal responsibility to report anyone who cheats on their taxes."

The results, which were derived from 1,000 phone interviews between Aug. 13 and 15, have barely budged for years. It's human nature for people to tell survey takers what they want to hear. But there is considerable evidence that many people do shortchange the government, whether it's because of their financial circumstances, the horrendously confusing tax code or, in some cases, because they believe they will never get caught.

The Net Tax Gap--the difference between what was collected and what was owed--for 2001 (the last year that data was made available) was about $345 billion, of which the IRS estimates $55 billion will eventually be recovered. According to the Tax Policy Center, underreporting on individual tax returns alone accounted for 68% of the gross tax gap in 2001. The IRS is cracking down. IRS audits of individuals jumped by almost 11% in 2010, with more than 1.58 million people scrambling to justify their returns.

Americans will never outright admit this to surveyors but cheating on taxes is as American as apple pie (even as the federal deficit tops $1 trillion). Most people find nothing wrong with a little "creative accounting," provided that it benefits them and that they don't get caught. Those that do get caught are often those too greedy or stupid.

Former Survivor winner Richard Hatch spent more than three years in federal prison after failing to pay taxes on the $1 million prize he won on the show in 2006. Media reports say that Hatch is in danger of returning to jail for failing to file amended tax returns as required by the judge at his trial. Actor Wesley Snipes wound up in the slammer after failing to file tax returns from 1999 to 2004.

Only 35% of respondents to the IRS survey said that the "fear of an audit" influences whether they report and pay their taxes honestly. That figure was 39% in 2009 and has changed little during the survey's history. When asked in the survey about how important it was for the IRS to ensure high-income taxpayers "are reporting and paying their taxes honestly," 78% said it was very important. That's an all-time low. Go figure.

Nearly 60% of respondents said that they would be "very likely" to use a toll-free telephone number to get answers to their tax questions. The problem is that about one-in-four taxpayers who try to get help say they are unable to do so, according to a report last year from the National Taxpayer Advocate, the IRS office which advocates for consumers. Indeed, the IRS has beefed up its Enforcement Budget, but it has been slashing money for Taxpayer Services for years.

Perhaps one way Uncle Sam could get taxpayers to be more honest is to spend more time clarifying the tax code and offering them help, instead of spending its resources on surveys asking them whether or not it's OK to cheat.

Hat Tip: TaxProf Blog

Increase your money and finance knowledge from home

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

Getting out of debt

Everyone hates debt. Get out of it.

View Course »

TurboTax Articles

Will Medicare/Medicaid be Impacted by ACA?

The Affordable Care Act put in place significant tax-related programs that impact Medicare and Medicaid, such as increased Medicare taxes on earned and unearned income for high-wage earners, and Medicaid changes that increase the number of insured individuals. Establishing whether you are affected by the ACA-imposed taxes, or are eligible for certain health programs that fall under the Centers for Medicare and Medicaid Services, is determined by filing your income tax.

8 Things You Think Are Tax Deductible That Aren't

There?s a fine line between looking to save money on your taxes and taking deductions that will raise eyebrows at the Internal Revenue Service. Some taxpayers are tripped up by expenses that they assume are tax deductions, but don?t qualify under IRS guidelines. Here are a dozen items that can lead to unpleasant surprises in case of an audit.

Essential Tax Forms for the Affordable Care Act

The Affordable Care Act (ACA), also referred to as Obamacare, affects how millions of Americans will prepare their taxes in the new year. The law now includes penalties for all who haven?t obtained health insurance -- and those penalties are expected to be paid at tax time. The ACA also provides tax credits to help people pay for insurance, and you can claim those credits when you file your taxes. The Internal Revenue Service (IRS) has introduced a number of tax forms to accommodate the ACA.

How to Determine if You Have Minimum Essential Coverage (MEC)

The Affordable Care Act, also known as Obamacare, requires most Americans to have health insurance that meets a government standard known as "minimum essential coverage," or MEC. Whether your insurance qualifies as MEC depends not on the plan itself, but on how you obtained your coverage.

What are 1095 Tax Forms for Health Care?

In 2014 the Affordable Health Care Act, also known as Obamacare, introduced three new tax forms relevant to individuals, employers and health insurance providers. They are forms 1095-A, 1095-B and 1095-C. These forms help determine if you need to comply with the new shared responsibility payment, the fee you might have to pay if you don't have health insurance. For individuals who bought insurance through the health care marketplace, this information will help to determine whether you are able to receive an additional premium tax credit or have to pay some back.

Add a Comment

*0 / 3000 Character Maximum