Most Common Types of Tax Avoidance Cases
Tax avoidance consists of the use of legal mechanisms to reduce or avoid paying taxes. It is characterized by not contradicting the rules, but by making use of its defects to obtain an economic benefit, In other words, a company or person that resorts to tax avoidance is taking advantage of legal loopholes to reduce its obligations to the treasury.
The most common types of tax avoidance cases for IRS collections attorneys are:
Creation of an offshore company: The investor creates a company abroad, usually in a tax haven. Then, it puts a part or all of its wealth in the name of that new firm, which does not carry out any economic activity. The objective of this operation is to reduce the tax burden. It may be, for example, that the tax avoider seeks to avoid paying the Inheritance Tax.
Creation of an onshore company: The investor establishes a company abroad, and operates from there, instead of doing business from his homeland. The objective of the entrepreneur is to reduce the tax burden by avoiding, for example, the disbursement of a high commercial license that they charge in their native country. Said payment is the one that is required in exchange for the right to carry out an economic activity in a specific area. Unlike the previous case, a business is developing here.
Include doubtful deductible expenses: The company considers, for the calculation of its net profit, certain expenses that can be doubted, if they are related to the business. The objective of the firm is to reduce the amount on which it pays, for example, Corporation Tax, taking advantage of inaccuracies in the regulations. With the help of a Georgia debt collection law, you will be able to avoid legal issues.
Example of Tax Avoidance
Let’s look at an example of tax avoidance. Let’s suppose that John Brown wishes to leave property to his children, but in his inheritances are taxed at 6% tax. Mr. Brown then decides to create a company in a tax haven, where there is no Inheritance Tax. Then, he transfers the ownership of the property to this new company, through a simple administrative procedure.
Therefore, upon the death of Mr. Brown, his children will carry out the transfer of the inheritance in the tax haven. Assuming the property is valued at $ 250,000, the amount of tax evaded would be: 250,000 * 0.06 = US $15,000. Many collection lawyers are out there to help you figure it out.
The avoidance of income taxes is also done using a company that does not reside in the country itself and the owner will be registered as an employee, with an assigned minimum salary, exempt from taxes. This company will have its legal base in a Tax Haven, and will be able to operate businesses such as international trade, medical services, legal services, intellectual property licenses, etc.
The avoidance technique of this tax consists of putting all the assets in the name of various companies registered in one or more Tax Havens. The interested party owns 100% of these companies, although confidentially, and must ensure that the tax authorities of a country cannot access this information in any way. For this, it is necessary to use a Tax Haven that offers absolute guarantees of confidentiality.
Tax avoidance takes advantage of legal loopholes to achieve the minimum tax burden, so it requires acting at the limit of legality in order to avoid or minimize taxes that otherwise should be paid. On the one hand, it is the key piece of tax planning, since they try to take advantage of available legal resources to obtain tax advantages, sometimes avoiding the taxable event or trying to delay its impact over time. Thus, in principle evading is legal, since legal methods are used to pay less tax, which does not prevent it from being prosecuted. However, avoiding on the other hand is not legal, especially, if you owe the government money.
Consult an Attorney
An IRS collections attorney Atlanta can help you by drafting a letter to the IRS about your particular situation. A letter coming from an attorney will surely get the IRS attention. While the IRS may say that taxes are owed, a good defense attorney may be able to show that there were expenses left out, which should have counted in the tax preparation process. To avoid being prosecuted, you can voluntarily disclose any violations to the IRS. Having a debt collection lawsuit attorney on your side is the best way to avoid criminal prosecution. IRS collection Lawyers will show that it could be confusion or an honest accounting mistake on your part and not a deliberate criminal activity. You are going to need a creditor collection attorney like Law Office of Max Benkel where you will get the best legal representation.