Louisiana Department of Revenue

What is Tax Fraud?

Tax Fraud Defined

Fraud is a deception deliberately practiced to secure unfair or unlawful gain. Another definition is the intentional misrepresentation of truth in order to obtain something of value by inducing another to rely upon false information.

Examples of Tax Fraud

• Intentionally failing to file individual income tax returns.
• A self-employed individual failing to report all income received.
• Filing an individual income tax return and deliberately understating the amount of income that was earned during the tax year.
• Overstating the number of children or other dependents on an individual income tax return.
• Filing an individual income tax return claiming to be a resident of another state while residing in Louisiana.
• Making false or fraudulent claims for refunds.
• Filing a Louisiana General Sales Tax return deliberately omitting sales tax transactions on which sales tax was collected.
• Failing to maintain records that show the true income and expenses of a business.
• Preparing documents, books and records that understate the true income or overstate the expenses of a business.
• Sales of imported cigarettes and other tobacco products without payment of the Excise Tax on these products.
• Sales of imported beer, liquor or wine without the payment of the Excise Tax on these products.
• Operating a business without registering with the Louisiana Department of Revenue.
• Payment of cash wages to employees for the purpose of avoiding Louisiana Withholding Tax.
• Avoiding the Excise Tax on diesel fuel by using "Off Road Diesel" in the fuel supply tanks of a motor vehicle for use on highways.
• Ignoring the requirements to report and pay use taxes on goods imported into the state.
• Opening and closing of new businesses to evade taxes.
• Operating a business using someone else’s name to avoid business and income taxes.

How does tax fraud affect me?

When dishonest people fail to pay their fair share of taxes, it has a negative impact on businesses, consumers and on the performance of vital state services. Tax fraud often leads to higher prices, possible tax increases, inadequately funded school systems, poor roads, bridges and infrastructure and a reduction in other government supported programs. The burden of covering these shortages falls on honest taxpayers and the public in general.

Evasion or Avoidance?

Tax Avoidance:

• Legal tax planning to minimize one’s tax liability.
• Reduce, avoid, or minimize taxes by changing the nature of a transaction to comply with a tax exemption or exclusion. (Details of the transaction are disclosed).
• Not concealed or misrepresented.
• Shapes and preplans events to reduce or eliminate tax liability by taking advantage of favorable tax laws.
• Prepares documents showing the details of the transactions and reports the transactions.

Tax Evasion:

• Willful attempt to circumvent the tax laws through misrepresentation or deceit.
• Involves deceit and deception, hiding the true nature or misrepresenting the facts to take advantage of a tax exemption or exclusion that doesn’t actually apply.
• Intentional concealment and misrepresentation.
• Structures events and transactions to hide the true nature of the transactions.
• Fails to prepare, conceals, alters, or destroys the documents that show the true details of the transactions.

Frequently asked questions

How To Select A Tax Preparer:

1. If you are going to pay someone to do your tax return, be sure to choose your tax preparer wisely. Remember that you are legally responsible for what is on your tax returns even if they are prepared by someone else. So, it is important to find a qualified tax professional.


2. Be sure to:
1. Try to find a preparer who will be around to answer questions after the return has been filed.
2. Find out what the preparer’s service fees are before the return is prepared.
3. Avoid preparers who base their fee on a percentage of the amount of your refund or who claim they can obtain larger refunds than other preparers without first reviewing your returns.
4. Avoid tax preparers that ask you to sign a blank tax form.
5. Before signing your return, review it and ask questions.
6. Ask others that you know who have used that preparer if they were satisfied with the services that they received.
7. Ask any preparer that you are considering for references.
8. Check to see if the preparer has any questionable history with the Better Business Bureau, the state’s board of accountancy for CPAs or the state’s bar association for attorneys.
9. Check to see if the preparer belongs to a professional organization that requires its members to pursue continuing education and also holds them accountable to a code of ethics.
10. Check to see if the preparer has a proper Preparer Tax Identification Number (“PTIN”) from the Internal Revenue Service (“IRS”), which is required to file federal tax returns beginning in 2011.
11. Check to see if the IRS has not obtained a permanent injunction prohibiting the preparer from preparing federal tax returns.
12. Always question entries on your return that you don’t understand. Never sign a blank return.
13. Insist that the preparer sign the return and provide appropriate taxpayer information on the return.


3. Traits of a reputable preparer:
1. They ask multiple questions to determine whether expensed, deductions and other items qualify and remind clients that they need to keep careful and complete records in order to substantiate information contained on their tax return. They do this with their client’s best interest in mind and are trying to help their client avoid penalties, interest or additional taxes.
2. They provide their clients with a copy of their completed return for their records.
3. They respond to contacts made by their clients in a reasonable period of time.

How Do I report fraud in State Government?

To report fraud in State Government you need to contact the Office of State Inspector General by one of the following methods:

1. By calling the Fraud and Abuse Hotline at 1-866-801-2549, or
2. By calling (225) 342-4262, or
3. By fax at (225) 342-6761, or
4. Via internet at http://doa.louisiana.gov/oig/inspector.htm
5. By mail or in person at the following address:
   150 Third Street, Third Floor
   Baton Rouge, LA 70801

Press Releases:

1. 2011
2. 2010
3. 2009

What is Identity Theft?

Identity theft occurs when a person knowingly transfers or uses, without lawful authority, a means of identification of another person with the intent to commit or to aid or abet any unlawful activity (18 United States Code 1028 (a) (7)). It is one of the fastest growing segments of financial crime in America. The Better Business Bureau estimates that more than 9.3 million Americans were victims of identity theft in 2004. Identity theft costs a staggering $48 billion a year to businesses and an additional $5 billion to consumers.

Effects of Identity Theft

Generally, identity thieves use someone’s personal data to steal his or her financial accounts and run up charges on the victim’s existing credit cards. But it can affect your tax records as follows:

• Undocumented workers or other individuals use your social security number to get a job. The employer then reports W-2 wages they earned under your social security number to us. When you file your return based on your real W-2 income, it appears that you failed to report all of your income on your return.
• An identity thief may file a return using your social security number to receive a refund. If the thief already filed a return using your social security number, our records will show that you already filed, received your refund, and the return you just submitted is a second copy or duplicate.
• If we send you a notice, or letter that leads you to believe someone may have used your social security number fraudulently, contact us immediately by phone or in writing as directed in the notice. Our representatives will work with you to help resolve the problem. For example, you should contact us if the notice shows one of the following:
• More than one tax return was filed under your name and social security number.
• Our records show that you received wages from an employer that you do not recognize.
• Note: We do not send emails asking for personal taxpayer information. If you receive this type of request, do not respond. It may be an attempt from identity thieves to get your private tax information.

Avoid becoming an identity theft victim:

• Get a copy of your credit report. Under a new federal law, the credit reporting agencies (credit bureaus) must provide individuals with one free credit report each year. Go to www.annualcreditreport.com or call (877) 322-8228.
• Be informed. Contact the agencies below for more information.

  U.S. Postal Inspection Service	http://www.usps.com/postalinspectors/id_intro.htm
  Federal Trade Commission	www.ftc.gov/bcp/edu/microsites//idtheft/

If you become an identity theft victim:

• Fill out the Louisiana Identity Theft Affidavit, Form R-2000 and submit it to the Criminal Investigations Division as instructed on the form.
• Get the Identity Theft Victim Checklist and follow the guidelines
• Contact the major credit reporting agencies immediately.

  Experian	www.experian.com
  Equifax	www.equifax.com
  Trans Union	www.transunion.com