Tax Fraud Flashcards
Which of the following tax evasion schemes would be accurately classified as an income and wealth tax evasion scheme?
A. Fraudulently applying for a refund of a value-added tax
B. Smuggling goods into a jurisdiction to avoid paying excise taxes
C. Pretending to transfer assets to another person or entity to lower tax liability
D. All of the above
C. Pretending to transfer assets to another person or entity to lower tax liability
Assuming that the relevant jurisdiction recognizes each of the legal defenses below, which of the following is the BEST defense against a tax evasion charge, provided that the facts will support the defense?
A. Reliance on an attorney
B. Lack of tax deficiency
C. Reliance on an accountant
D. Ignorance of the law
B. Lack of tax deficiency
A value-added tax can be defined as a tax on goods or services that is usually assessed at the consumer level and collected by the retailer or seller at the point of sale.
A. True
B. False
False
Which of the following is a common legal defense to tax evasion?
A. The taxpayer had a mental illness at the time of the conduct
B. The taxpayer relied on an attorney or accountant
C. The taxpayer engaged in tax avoidance, not tax evasion
D. All of the above
D. All of the above
Melanie lives in a country that requires her to report her foreign bank accounts to the government annually, but she intentionally fails to report an account she has in a tax haven country. Which of the following BEST describes this type of tax evasion scheme?
A. Tax credit scheme
B. Income and wealth tax evasion
C. Falsified tax deduction scheme
D. Consumption tax evasion
B. Income and wealth tax evasion
Which of the following statements is CORRECT?
A. Neither tax evasion nor tax avoidance is illegal.
B. Tax avoidance is illegal, but tax evasion is not.
C. Tax evasion is illegal, but tax avoidance is not.
D. Both tax evasion and tax avoidance are illegal.
C. Tax evasion is illegal, but tax avoidance is not.
Which of the following refers to investments that are designed to yield a tax benefit to the investor?
A. Tax havens
B. Tax shelters
C. Money laundering havens
D. Secrecy jurisdictions
B. Tax shelters
In most jurisdictions, a taxpayer will typically be guilty of conducting a criminal tax offense willfully even though they had a good faith or legitimate misunderstanding of the law’s requirements.
A. True
B. False
False
The death of the taxpayer and bankruptcy proceedings typically serve as legal defenses against criminal tax evasion.
A. True
B. False
False
A government imposes a onetime tax that only applies to imported alcohol products. Which of the following BEST describes this type of tax?
A. Income tax
B. Value-added tax
C. Excise tax
D. Credit tax
C. Excise tax
Sandra, who has no accounting experience, completed tax documents for her new business. The information was more complex than she realized, and she improperly (although unintentionally) completed the documents. Which of the following statements is MOST ACCURATE?
A. Sandra will not be subject to criminal penalties because her improper act was not willful.
B. Sandra will not be subject to criminal penalties because new businesses have one year of immunity from criminal tax liability.
C. Sandra will be subject to criminal penalties because she incorrectly completed the documents.
D. Sandra will only be subject to criminal penalties if the government suffered an actual loss.
A. Sandra will not be subject to criminal penalties because her improper act was not willful.
Sarita is a business owner located in a country that permits companies to subtract the cost of production from their gross sales to determine the taxable income. To reduce her tax liability, Sarita inflates the costs of production in her tax records. Sarita is committing a consumption tax scheme.
A. True
B. False
False
In tax fraud cases, willfulness to commit the offense can be inferred from all the following types of conduct EXCEPT:
A. Destroying books or records
B. Covering up sources of income
C. Keeping a single set of books
D. Concealing assets
C. Keeping a single set of books
Jean intended to defraud the government by failing to withhold taxes on her employee’s income, but it turns out there was no tax deficiency because her employee was exempt from such taxes. In most jurisdictions, would Jean be criminally liable for tax evasion for this conduct?
A. No, because failing to collect taxes on employee income is not a criminal offense.
B. Yes, because she did not collect taxes on the employee’s income.
C. Yes, because she intended to defraud the government.
D. No, because there was no tax deficiency.
D. No, because there was no tax deficiency.
Which of the following is a commonly available defense against tax fraud accusations?
A. Death of the taxpayer
B. Bankruptcy
C. Mental illness
D. Amending the fraudulently submitted information
C. Mental illness
