Tax Evasion / Tax Fraud
Tax evasion is using illegal means (misrepresentation, false information, etc.) in order to avoid paying taxes. This crime may be committed by an individual or by a company through any one or more of a number of transactions or other actions which are meant to help that person or company avoid paying state, federal, income, employment and sales tax, as well as any other type of tax levied by the government.
Tax evasion and tax fraud cases may be investigated and prosecuted on a state or
federal level, depending on the type of tax involved. The IRS (Internal Revenue Service) plays a crucial role in the fight against tax evasion by auditing returns and conducting investigations of alleged tax fraud to identify and expose offenders. Working to mitigate the taxes that an individual or company pays is not a crime in itself, as long as these actions are taken through legal means. It is only when a taxpayer intentionally and willfully attempts to or successfully avoids paying taxes through unlawful means that criminal charges may result.
Tax fraud may be charged in state or federal court, with varying penalties imposed upon a conviction. Fines are a common penalty, including the mandatory payment of taxes that were initially unpaid. A defendant may also face time in jail or prison, depending on the amount of money involved and whether he or she is a repeat offender.
Types of Tax Evasion
There are a number of different ways that a taxpayer may attempt to commit tax evasion. Some examples include:
- Failing to file a return or returns
- Falsifying information on a return or other paperwork
- Claiming fraudulent deductions
- Understating income
- Overstating losses
- Writing off personal expenses as business expenses
- Any other misrepresentation committed with the intent of illegally avoiding taxes
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