Because accusations of tax evasion can be serious, it is important to understand what tax evasion refers to. Because the tax code is complex, mistakes are understood, however, under-reporting income on purpose and claiming deductions the filer should not receive is considered tax evasion. Tax evasion is considered a serious offense.
Tax evasion is defined by the Internal Revenue Service (IRS) as the failure to pay or the deliberate underpayment of taxes. Tax evasion can result in significant fines or even prison time for the filer accused of tax evasion. There are two different forms of tax evasion recognized by the IRS including evasion of assessment of taxes and evasion of payment of taxes. It is important to keep in mind that simply failing to pay taxes is not considered tax evasion.
To be guilty of tax evasion, the taxpayer must have intentionally taken an affirmative act to avoid either their true tax liability or payment of the taxes. Examples of tax evasion include transferring assets to avoid tax liability of hiding assets to avoid payment of taxes. Additional examples of tax evasion can include filing a false return; making false invoices; keeping two sets of books; overstating deductions; concealing sources of income; destroying records; or holding property in another person's name.
Certain elements are required to make a case for tax evasion and the potential penalties and consequences the accused individual faces depend on the nature of the circumstances of the tax evasion alleged. Tax evasion is a serious allegation which can result in significant penalties and detrimental consequences for the individual accused of a tax crime which is why it is important to understand what constitutes tax evasion and that legal resources are available to challenge an accusation of tax evasion.
Source: Tax.findlaw.com, "What Is Tax Evasion?" Accessed April 25, 2018