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Tax evasion versus tax avoidance

On Behalf of | Apr 22, 2022 | Criminal Defense

Every person and every business must deal with the IRS. Sometimes taxes are simple – sometimes they’re incredibly complicated. Making mistakes is human nature. And while they can cause you a lot of anxiety with the IRS, intentional mistakes can land you in serious trouble.

Tax avoidance

There’s nothing illegal about trying to pay fewer taxes. Tax avoidance may sound like you’re doing something bad but you’re not. It’s nothing more than taking advantage of tax law in such a way as to reduce your tax burden. Charitable giving and 401(k) deposits are just two examples of the many ways you can utilize tax law in your favor.

Tax evasion

When tax avoidance crosses over into illegal fraudulent activity, that’s when it becomes tax evasion and subject to criminal prosecution. To become a criminal act, the person or business must take some action designed to intentionally deceive the IRS. Typically, this takes the form of underreporting income or overinflating deductions. The key is that it must be a willful act.

The IRS takes tax evasion very seriously and a conviction for it can result in heavy fines and even time in prison. However, prosecution for it is not always a simple matter. The government must prove that you owed the tax to begin with, that you took some act which was a misrepresentation and that you did it with the intent to avoid paying the tax. There’s a fine line between an honest mistake and a criminal act and it’s not always easy to tell where that line falls.

If you’re being investigated for tax evasion, seek the assistance of a knowledgeable professional who is experienced in federal criminal defense. They can help you navigate the complex world that is tax law.