Whether through misrepresentation, deception, or a combination of both, tax evasion is an act that can lead to criminal charges. These crimes involve deceiving the government by hiding or concealing the true nature of an event, transaction, or asset. The actions that are a part of tax fraud can include altering, destroying, or arranging transactions in such a way as to conceal the true nature of the transaction.
False deductions are another common form of tax fraud. The IRS closely watches for inflated deductions from pass-through entities. While it may seem tempting to deduct personal expenses as business expenses, this practice is a recipe for trouble. Proper record-keeping can avoid being found guilty of tax fraud. In addition to filing a return with a fictitious name, you should keep records of every financial transaction, including those related to business.
If you have been arrested for tax evasion, the penalties are harsh. If you have been caught, you may face imprisonment for up to 76 months, or even a five-year probation period. Regardless of your criminal record, it is crucial to consult a knowledgeable tax attorney for the best case scenario. It’s important to remember that tax evasion is not confined to federal income tax; it can also include state income tax and sales tax. In one recent case, a tobacco store owner was sentenced to 76 months in prison after pleading guilty to hiding and failing to report more than $60 million in cash receipts. He claimed a very small portion of his $60 million in cash receipts as business expenses, but it was the same for the company.
There are many legal ways to avoid paying taxes and minimize the burden on the government. For example, people can use tax loopholes to defer taxes until a later date, while claiming tax credits for legitimate spending like paid family leave. Whether you are avoiding paying taxes or using tax loopholes, it is important to consult with a knowledgeable tax attorney or tax professional if you have any questions about your taxes. They can help you avoid the pitfalls of tax evasion.
Tax evasion involves illegal means of avoiding taxes. Some tax avoidance techniques include underreporting income, overstating deductions, and hiding money in offshore accounts. According to the U.S. Government, $345 billion in taxes were lost in 2007 due to tax evasion. If you’re one of those people who’ve been caught, you’ll be hit with a steep fine or even jail time. And remember that avoiding penalties doesn’t mean you’re above the law.
The statute for tax evasion is broad enough that corporations, estates, and estate administrators can be prosecuted for trying to evade the tax. The “any person” language makes the act of evading taxes possible even if the principals of the organization don’t pay the tax. Often, the taxpayer will have a non-taxpaying employee assisting him in the scheme, such as a bank or an attorney.