p How the IRS Reconstructs Income in Tax Fraud Cases

How the IRS Reconstructs Income in Tax Fraud Cases


May 26, 2022


Michael DeBlis

  01:00 PM ET | 12:00 PM CT | 10:00 AM PT | 120 Minutes

* Not able to attend the live session? We can arrange an on-demand session for You. Please call 1-814-892-0304


In one of the climactic scenes from 1954’s On The Waterfront, Crime Commission prosecutors had to make their corruption case against union boss Johnny Friendly (a/k/a Michael Skelly) by convincing a reticent yet pure-hearted Terry Malloy to come forward and tell what he knew about corruption in the International Longshoremen’s Association, beginning with the murder of Joey Doyle, because an underling insisted that “we were robbed last night and can’t find no books.”

If that same case came up in 21st Century tax court, Eva Marie Saint and Karl Malden could’ve stayed at home rather than serving as Marlon Brando’s cheering section, because government prosecutors could reconstruct the ILA’s income, based on the records retention requirements in Section 6500 et seq.

In other words, the conventional wisdom that only divine beings can create something out of nothing does not apply in income tax evasion cases. Is it enough for the government to pull a metaphorical rabbit out of a metaphorical hat, or are there some additional requirements?

Why Should You Attend?

Tax fraud occurs when an individual or business entity willfully and intentionally falsifies information on a tax return to limit the amount of tax liability. Tax fraud essentially entails cheating on a tax return in an attempt to avoid paying the entire tax obligation. Examples of tax fraud include claiming false deductions; claiming personal expenses as business expenses; using a false Social Security number; and not reporting income.

Tax evasion, or illegally avoiding payment of taxes owed, may be construed as an example of tax fraud.

Learning Objectives:

  • Elements of Tax Evasion
  • Define Substantial Tax Deficiency
  • Methods of Proof

Attendees will learn:

  • Defining Tax Fraud
  • Types of Tax Fraud
  • Tax Fraud—Precautions and Preparations
  • Recent Stories of Tax Fraud
  • Understand the most common tax fraud
  • What are the red flags for tax fraud? 
  • What is the cost of tax fraud to the federal government? 

Who Should Attend?

  • CPA’s
  • EAs
  • Other Tax Preparers
  • Tax Attorneys 

Credits and Other Info:

Session Prerequisites and preparation: None

Recommended CPE credit – 2.0

Recommended field of study – Tax

Session learning level: Basic to intermediate

Delivery method: Group Internet Based

Thecpeeducator is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.