Are you a tax cheat?

Blake Ellis, staff reporter


NEW YORK (CNNMoney.com) -- Do you cheat on your taxes? If so, you're not alone. More Americans are fudging their taxes and an increasing number of people are scared of being audited, a survey from the IRS Oversight Board shows.

Thirteen percent of those surveyed said cheating is acceptable, according to an annual poll conducted for the Internal Revenue Service Oversight Board. That's up 4% from 2008. Four percent of Americans said they cheat on their taxes "as much as possible," up 1% from the year before.

Do you cheat on your taxes?
  • Not at all
  • A little here and there
  • As much as possible

As tax season approaches this year, even more people may resort to cheating.

"I think the temptation will be greater this year, given the overall economic environment," said Bob Kerr, senior director of government relations at the National Association of Enrolled Agents.

But it's still impressive that more than 80% of those surveyed said they don't think it's ever acceptable to cheat, said Kerr.

How people cheat: As the government offers more refundable credits to taxpayers, such as the Making Work Pay Tax Credit, people may be tempted to try to claim more money than they deserve.

"We're getting more refundable credits," said Mark Luscombe, a tax analyst at CCH. "Historically, when you're able to get a check from the government in your hands right away, this has brought more cheaters out of the woodwork."

Besides common cheating tactics such as inflating the value of charitable donations and claiming personal expenses as business expenses if you're self-employed, Luscombe said a number of "cheaters" are simply those people who can't decipher the complicated tax code.

"People can't figure it out so they just put down a number that seems pretty good to them," he said. "The laws get more and more complicated each year and people just have less time to figure out the right way to do it so they might try to cut some corners."

Scared of getting audited: When asked if the fear of an audit plays a role in whether or not a taxpayer reports his or her taxes "honestly," 77% of Americans said yes, according to the poll.

That shouldn't be a surprise given the higher likelihood that you will be selected for a review. Last year, the number of audits rose to the highest level in a decade, and even more audits are expected this year as the Obama Administration pours money into tax enforcement.

A hotline was created to prevent cheaters from slipping past the IRS. Anyone with information about suspected tax fraud is encouraged to report it to the agency's tip line at 1-800-829-0433.

"There's still only about a 1% chance on average that you will be audited," said Luscombe. "But the audit rate has headed back up in the last couple years so your chances are certainly going up." To top of page

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