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TAX REPRESENTATION FROM A FORMER IRS EMPLOYEE

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Does failing to pay enough tax equal tax evasion?

On Behalf of | Apr 22, 2022 | Tax Evasion

Tax evasion is a serious crime to be accused of, but you should know that most people won’t be unless they have willfully attempted to avoid paying tax. Tax evasion happens only when someone or a business takes steps to illegally avoid paying the tax that they owe.

Failing to pay the right taxes can lead to criminal charges, but for most people, that won’t be the case. For those who don’t pay because they didn’t think they needed to or misunderstood what they owed, the more likely result will be some fines and interest along with a tax bill.

Tax evasion: Is paying too little the same thing?

Most people who pay too little on their taxes do so because of errors that they made. For example, they may forget to include income from a source from the beginning of the year or forget that they needed to make an additional payment into their tax account.

People get busy, and mistakes do happen. In those cases, paying too little won’t usually result in the Internal Revenue Service accusing them of tax evasion.

That being said, you could be accused of tax evasion if you intentionally leave out sources of income that you know about and underpay on your taxes. It doesn’t matter if you do or do not file your taxes with the IRS: The IRS can figure out if you owe and if you are intentionally trying to avoid paying your taxes.

Tax evasion is not legal, but tax avoidance isn’t the same thing

While tax evasion is an illegal act, avoidance is not. Avoidance refers to finding legal methods of avoiding taxation, such as by using deductions to reduce your obligations. If you want to reduce what you owe, an accountant and tax professional may be able to help you find deductions and credits to do so.

Until that time, if you’re facing allegations of tax evasion, it’s important for you to put up a strong defense. You don’t want to be on the wrong side of the IRS, so taking steps to protect yourself as soon as possible is essential.

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