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Pssst: The IRS Is Looking for Tax Cheats in These 5 Cities

A new study from the national taxpayer advocate found out who is most--and least--likely to cooperate with the IRS during tax season.

Whether you cheat on your taxes is between you and the IRS, but if you live in San Francisco, Houston, Atlanta, the District of Columbia, or the suburbs of Los Angeles--Uncle Sam may already have you in his crosshairs.

According to a new survey by the IRS' national taxpayer advocate, people in those areas are more likely to cheat on their taxes.

The survey, which looked at "sole proprietors (i.e., those filing Form 1040, U.S. Individual Income Tax Return, Schedule C)", found people fell into one of two groups: Those with low compliance levels (the cheaters) and those with high compliance levels (the non-cheaters).

Turns out, those who are likely to cheat tend to cluster in same geographic region, while those who aren't were more dispersed.

Interestingly, the study points out that tax cheats were actually more likely to use tax preparers (76 percent) than non-cheaters (66 percent), but the former said they were less likely to follow the preparer’s advice. 

More than 90 percent of both high and low-compliance groups cited a “moral” obligation to report income accurately. High-compliance respondents cited more trust in government and the IRS, while the 80 percent of low-compliance communities expressed a belief that large businesses and wealthy taxpayers have loopholes or advantages.

The low-compliance group was categorized under professional, scientific, or technical services, while high-compliance communities fell under the “other” service categorization, which includes repair and maintenance, personal and laundry, and private household services.





Last updated: Apr 16, 2013


Julie Strickland covers start-ups, small businesses, and entrepreneurial endeavors of all kinds for Inc. Her work has been published in Brooklyn Based and City Limits in New York, the Free Times in Columbia, SC, Real Travel Magazine in London, and Daegu Pockets in South Korea. She lives in New York City.

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