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What Is White Collar Crime?

White collar crime is a term which includes a large number of non-violent crimes. These crimes are committed in a business or commercial setting. They are considered non-violent because no physical harm is done to the victim. One type of white collar crime is called underreporting.

What Is Underreporting?

Underreporting is the deliberate act of reporting revenue or income less than the real amount received. A person typically does this when reporting their tax information to the U.S. Internal Revenue Service (IRS) in order to avoid paying a higher amount of taxes.

Is Failing to Report the Actual Amount of Money I Receive Fraud?

Yes. When an individual underreports income or revenue, it is considered fraud. Both states and the federal government prohibit underreporting fraud.

What Are Types of Revenue or Income That People Underreport?

An individual can fail to report employment income or:

  • Spousal support
  • Child support
  • Tax proceeds
  • Insurance claims
  • Money from a business
  • Disability payments
  • Various federal benefits
  • Workers compensation claims
  • Property received in a divorce

Is Tax Avoidance the Same as Underreporting?

No. Tax avoidance is a legal practice of arranging a person’s financial affairs to minimize the taxes they pay each year. This action does not involve deliberately lying about the amount of income or revenue that one receives.

Is Tax Evasion the Same as Underreporting?

While underreporting is a form of tax evasion, it is not the only kind of tax evasion out there. Rather, tax evasion is any act done to defraud the IRS. The act may include one or more of the following:

  • Underreporting yearly income or revenue
  • Hiding taxable money
  • Inflating deductions
  • Transferring income to offshore accounts

Tax evasion can be done by an individual or corporation.

What Are the Penalties for Underreporting?

Underreporting can result in many penalties such as:

  • Criminal sentence, which can include jail, prison, or probation
  • Criminal fees
  • Loss of business license
  • Loss of asset distribution or benefits

Should I Contact a Lawyer If I Am Accused of Underreporting?

Underreporting is a serious white collar crime. Thus, the consequences for an underreporting conviction can be quite severe. Contact a criminal lawyer to learn more about legal defense that may be available to you.

Photo of page author Taelonnda Sewell

, LegalMatch Legal Writer

Last Modified: 11-23-2015 04:04 PM PST

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