Did you know that one of the most common federal tax crimes is tax evasion? While no one is necessarily thrilled about paying taxes, taxes are a part of our infrastructure. Failing to report taxes, reporting them inaccurately or failing to pay them is not only unfair to other citizens, but is a criminal offense that can be costly. Is someone you know facing tax evasion charges or do you simply want to have a better understanding of the subject? If so, check out this tax evasion information from businessman David Stewart.
1. Tax Evasion is Illegal
Tax evasion is the most commonly charged tax crime. It is an illegal practice in which an individual or a business knowingly underreports or doesn’t report income in an effort to eliminate or lessen their taxes. A few common examples of tax evasion include businesses and employees underreporting income because they deal largely in cash (such as hair salons and waitresses), and families overstating the size of their home in order to receive a larger deduction.
2. If Caught, You can Face Criminal Charges
Tax crimes are usually found during audits, as auditors are trained to look for signs of tax fraud. If you are caught evading, you may face criminal charges and substantial penalties. However, to be charged with a crime, the IRS has to prove that you intentionally underpaid your taxes.
3. There is a Difference between a Simple Mistake and Deliberate Fraud
There are instances in which individuals or businesses make innocent mistakes when filing taxes. These will necessitate paying what you owed, but you will not face penalties and other charges. The good news is that most auditors will be able to distinguish innocent errors from intentional ones.
4. Tax Avoidance is Not Tax Evasion
While the terms seem synonymous, they have different meanings. Tax avoidance lowers your bill by arranging your transactions so that you receive the largest possible tax benefits. As a citizen, you have the right to lessen the amount of taxes you pay, but only if it is done via legal means. Tax evasion, however, is a deliberate attempt to reduce the taxes you owe by misrepresenting your income and is illegal.
5. An Attorney can Protect You
If you are accused of tax evasion or related charges by the IRS, it is imperative that you hire an attorney who specializes and is experienced in tax fraud and evasion to protect you.