Overview

This course provides an in-depth look at the methods the IRS uses to reconstruct income in tax fraud cases, focusing on indirect income verification techniques. Participants will explore the bank deposits method, net worth method, and expenditure method, along with how these approaches are used to identify unreported income. The course also covers key compliance considerations, red flags for fraud detection, and strategies to ensure accurate income reporting and audit preparedness.

Objectives

• What are the primary methods used by the IRS to reconstruct income in tax fraud cases, and how do they differ in application?
• How can taxpayers effectively defend themselves against accusations of income tax fraud, particularly when using the net worth method?
• In what ways do “badges of fraud” influence the determination of willfulness in tax evasion cases?
• What impact does the burden of proof shift have on the prosecution and defense in tax evasion cases, particularly in terms of unreported income?
• How does the concept of willful blindness apply to taxpayers who fail to report foreign financial accounts?
• What role do non-taxable sources of income play in defending against claims of unreported taxable income?
• How can the accuracy of the government’s calculations regarding a taxpayer’s net worth be challenged in court?
• What factors do jury members consider when determining whether a taxpayer acted willfully in the context of tax evasion?
• How do indirect methods of proving unreported income complicate the legal process for taxpayers accused of tax fraud?
• In what ways can the presentation of evidence regarding a taxpayer’s lifestyle and expenditures affect the outcome of a tax fraud case?
• How important is the understanding of tax laws and filing requirements for individuals with foreign accounts in avoiding tax evasion charges?
• What are the potential consequences for taxpayers who fail to disclose foreign accounts, both legally and financially?