Tax fraud or tax evasion is the unlawful avoidance of tax payment by an individual, company or trusts; it mostly involves taxpayers willingly giving wrong information about their real value of property or incomes to the system to reduce their tax accountability. In the United States of America, Federal tax dodging is the criminal act of willingly avoiding the payment of tax obligated by federal law. Tax evasion when discovered by the government is punishable by fine, imprisonment or both.
The main source of government revenue is taxation and if majority avoided paying their tax duty, the state’s ability to provide to its citizens basic amenities would be seriously affected (Bagaric, et al 512). Therefore, it is essential for the law and order department to enforce laws that discourage tax evasion. The most common punishment for tax fraud is imprisonment; mainly this is usually to discourage other prospective lawbreakers from engaging in similar act however this is not proof that the ruthless sentence for tax offences increases tax compliance.
With regards to a case in which a funeral home owner engaged in a tax fraud and how he faced the consequences, a court document acknowledges that Stainback and two others filed an incorrect corporate tax return for the funeral home they owned, redirecting money from the business in a span of three years (Janicello). In an effort to cover up the tax fraud, the men erased and tainted invoices in the funeral’s home accounting system and continued to reroute funds even after learning that the Internal Revenue Service was looking into the business. Clearly they underestimated ability of the IRS and Department of Justice to discover and inspect such acts of tax fraud of skimming funds from their own business (Zachary).
According to times-news the two owners of a funeral home in Graham were sentenced to prison for tax evasion. Kenneth Dale Stainback who was the secretary of the funeral home was sentenced to fourteen months in prison and three years of supervised release which meant he had to engage in community service for the entire period of three years. Before resigning from the board of funeral service Stainback pleaded guilty in U.S. court to scheming to deceive the government. Stainback and his conspirator were also fined $158,530.11 in accordance with the law for corporate tax loss also he was required to pay the government $12,213 for individual tax loss (Janicello).
The basic hypothetical analysis of punishing the tax frauds is that it discourages others from engaging in similar offences but the best way to accomplish greater tax compliance is not by commanding serious sanctions but by mounting the awareness that one will be arrested if they manipulated their tax and this can be achieved by allocating more funds to tax review and informing the community (Bagaric, et al 538). As Stainback and his colleagues came to realize deceiving and stealing from the government results to harsh punishments such as imprisonment, fines and loss of professional licenses.
Bagaric, Mirko, et al. "The Fallacy of General Deterrence and the Futility of Imprisoning Offenders for Tax Fraud." Australian Tax Forum, vol. 26, no. 3, July 2011, pp. 511-540
Janicello, Natalie. "Graham Funeral Home Owners Sentenced To Prison For Tax Fraud." The Times, 2016, https://www.thetimesnews.com/news/20160330/graham-funeral-home-owners-sentenced-to-prison-for-tax-fraud.
Zachary, Kristin. "NC funeral board president resigns after guilty plea." Bizjournals.Com, 2015, https://www.bizjournals.com/triad/news/2015/11/25/nc-funeral-board-president-resigns-after-guilty.html.