Where Tax Cheats Live: IRS Fugitives Flock To Houston, Atlanta

Have you ever wondered where tax cheats live? As in, the cities with the highest per capita number of folks who are less than honest during tax season every year? A new report shows that they tend to huddle together in certain major cities like Houston and Atlanta.

A study performed by the National Taxpayer Advocate used IRS data to find where tax cheats live around the country, finding huge clusters in five metropolitan areas: Los Angeles, San Francisco, Houston, Atlanta, and the District of Columbia housed the greatest number of folks who fudge their financials every April.

The IRS uses such information to target taxpayers for audits, so if you’re a small business owner in any of those cities, good luck to you.

Though the study was intended to help shed light on why some taxpayers are more likely to cheat than others, it also looked into tax compliance in different industries. It discovered that owners of construction companies and real estate firms are more likely to cheat on their taxes than other businesses.

Many of the areas where tax cheats live are considered wealthy spots, like Beverly Hills and Newport Beach. The likelihood of an IRS audit increases with income, and Steve Rosansky, president and CEO of the Newport Beach Chamber of Commerce, believes that business owners in his city are targeted for that reason.

“I imagine it’s just a matter of them going where they think the money’s at,” he said. “I guess if I was running the IRS I’d probably do the same thing.”

The study also looked for areas full of small business owners who were considered highly unlikely to cheat on their taxes.

These “most honest” communities are: the Aleutian Islands in Alaska, West Somerville, Massachusetts, Portersville, Indiana, and Mott Haven, a neighborhood in the Bronx in New York City’s boroughs.

Stephen Macket, the president and CEO of Somerville’s Chamber of Commerce, applauded business owners in his community for their civic virtue. Though he was happy with the study’s results, he wasn’t entirely sure why his town made the cut.

“I’d like to think we’re not alone in terms of the civic engagement of business people,” he said. “But I would say two things. One is they are very close to the community inside and outside their businesses. At the same time, it’s not small town America. It’s minutes from downtown Boston.”

Do you live where tax cheats live? Also, have you filed yet this year? If not, take a look at our article on “Tax Day Freebies.”

[Image via: Creativa, Shutterstock.com]