Millions of people all over the world pay taxes each year. These taxes could include amounts collected by the government or similar organization on behalf of the federal government, state government, local governments and even other taxing authorities. In 2009 alone, the Internal Revenue Service received $1.9 trillion dollars in revenue, and completed over 236 million returns. “The tax system in the United States depends on voluntary compliance, which means that each citizen is responsible for filing a tax return when required and for determining and paying the correct amount of tax” (Albrecht, 567). While most people are honest and report their correct income and pay their tax obligations, some people intentionally distort their amount of income to underpay their taxes, or pay no tax at all. Intentionally underpaying your taxes is considered to be tax fraud and is a crime punishable by fines and/or imprisonment.

Fraud is defined as “deception deliberately practiced in order to secure unfair or unlawful gain” (spamlaws.com). As it relates to taxes, fraud constitutes intentionally underreporting income that is legally due, or even intentionally overstating tax deductions and exemptions that you are not entitled to. The first version of Income Tax was introduced in Britain and known as a temporary tax used to help fund the Napoleonic Wars. As with most things, as soon as something new comes out, you have dishonest people already trying to hack, evade, manipulate, etc. for their own purposes. Needless to say, when these temporary taxes came out in Britain, “evasion of tax by claiming excessive allowances became so prevalent that a drastic overhaul of all types of deductions was effected” (kestreltax.com) This was due to the fact that many people had been falsely reporting lower levels of income. In fact, according to the same site, fraud and tax evasion became a