Tax Cheaters Proliferate in Newport Beach, Study Says

When it comes to cheating on taxes, small businesses in Newport Beach are more likely to fudge their returns, according to a new study.

The analysis by the National Taxpayer Advocate used confidential 2009 tax return data to pinpoint which U.S. cities were most predisposed to lie to the Internal Revenue Service, the Associated Press reported.

The study focused on sole proprietor small businesses, which account for two-thirds of all U.S. businesses, because many deal in cash, which provides more cover to falsify numbers, the article said.

The study also examined tax compliance in different industries and discovered construction and real estate rental companies were more likely to file doctored tax returns, the AP reported.

Steve Rosansky, president and CEO of the Newport Beach Chamber of Commerce, suggested local businesses were singled out because many have high incomes.

"I imagine it's just a matter of them going where they think the money's at," Rosansky told the Associated Press. "If I was running the IRS, I'd probably do the same thing."

Other local communities identified as hotbeds of tax cheating included Aliso Viejo, Anaheim Hills, Ladera Ranch, Laguna Niguel, Monarch Beach, Rancho Santa Margarita, San Clemente, South Laguna and Yorba Linda.

To read the full story, click here. For the full list of suspect cities, click here.