According to the IRS, "the following types of taxpayer behavior are badges of fraud” as shown below;
- an understatement of income due to omissions of specific items.
- an understatement of income due to failure to report substantial amounts of income received.
- fictitious or improper deductions.
- accounting irregularities.
- false statements.
- concealment of assets.
- engagement in, or attempts to, conceal illegal activities.
- inadequate records maintenance.
- substantial cash transactions.
- a failure to cooperate with the examining agent."
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