Definitions

Tax evasion is the general term for efforts to not pay taxes by illegal means.  Tax evasion usually entails taxpayer deliberately misrepresenting or concealing the true state of their affairs to reduce their tax liability.  Tax evasion requires a willful intent on the part of the taxpayer. 

Tax evasion does NOT include a taxpayers attempt to avoid or minimize their tax liability by utilizing exemptions, deductions and exclusions granted by law.  The distinction between tax avoidance and tax evasion is the reason taxes are extremely complex and often require forensic accountants to reconstruct financial transactions to determine the difference between tax evasion and tax avoidance.

Tax avoidance is the right of every citizen to structure one's affairs in a manner allowed by law, to pay no more tax than what is required.

Aggressive Tax Planning is tax avoidance and is NOT tax evasion. 

Forensic accounting can provide the documentation you need to distinguish the difference between tax avoidance and tax evasion.

Foreign accounts are best defined by the IRS reporting requirements.  The IRS website provides a "Workbook on the Report of Foreign Bank and Financial Accounts (FBAR)".

http://www.irs.gov/businesses/small/article/0,,id=159757,00.html#definition2

Additional examples of foreign accounts are:

• Foreign life Insurance policies with a cash surrender value greater than $10,000
• Trusts with foreign financial accounts
• Investments in gold bullion
• Foreign-type individual retirement accounts
• Pension plans that are in the client's control
• Foreign annuities with a balance that exceeded $10,000 any day during the year
• Inheritance from a foreign-based relative

IRS Fraud Examiners possess specialized knowledge and training in IRS forms, documents, computer codes, the IRS computer system, IRS master file (IMF), administrative files, examination files, criminal tax files, IRS evidence and know how to communicate what the documents mean.  IRS fraud examiners assist taxpayers and attorneys in understanding what the IRS evidence means, what evidence has been omitted and assist in developing a solution to the IRS tax issues. 

IRS Forensic Accounting is a method of unraveling complex tax transactions by examining IRS forms, documents, computer codes, the IRS computer system, IRS master files (IMF), administrative files, examination files, criminal tax files and performing analytical reviews and identifying evidence to assist the taxpayer and/or attorney in resolving complex tax issues.

IRS Forensic Accountants combine their knowledge of accounting and finance with law and investigative techniques when examining IRS records and sometimes testify as to their findings and provide litigation support. 

IRS Forensic Accountants are used by attorneys during trials as non-testifying experts to assist with cross examination of IRS witnesses.

Some IRS Forensic Accountants are Certified Fraud Examiners (CFE).

A Certified Fraud Examiner (CFE) is a specialist who is educated and trained in the detection and deterence of a wide variety of white collar crimes such as identify theft, fraud and embezzlement, CFEs gather evidence, take statements, write reports and assist in investigating fraud in its varied forms.  CFEs are employed by most major corporations and government agencies and others provide consulting and investigative services.  Certified Fraud Examiners (CFE) come from various professions including forensic accountants, auditors, CPAs, fraud investigators, loss prevention specialists, attorneys, educators and criminologists.

• FBI officially recognizes the CFE designation as a critical skill set for its diversified hiring program
• U.S. Department of Defense officially recognizes the CFE credential as career advancement criteria in its Department of Defense policy
• The Forensic Audits and Special Investigations Unit (FSI) for the Government Accountability Office has announced that all professionals in the FSI unit must obtain their CFE credential
• U.S. Postal Inspection Service
• U.S. Office of the Inspector General, U.S. Department of the Interior
• U.S. Office of the Inspector General, National Reconnaissance Office

For more information about Certified Fraud Examiners visit the site for the Association of Certified Fraud Examiners at:

http://www.acfe.com/