WHAT CONSTITUTES TAX EVASION?
On behalf of Law Office Of Scott G. Cerbin, Esq., PLLC posted in federal crimes on Sunday, September 16, 2018.
As a New York taxpayer, you likely have a healthy respect for the Internal Revenue Service, if not an actual fear of this all-powerful governmental entity. You likely also do everything possible to make sure you file your taxes every year by April 15 and pay whatever taxes you owe.
Whether you compute your own taxes or hire a company to prepare them for you, however, you probably occasionally worry about what will happen if you or your tax preparer makes a mistake. Will the IRS charge you with tax evasion? As FindLaw explains, the answer is “no.” Tax evasion applies only to deliberate attempts you make to understate your income or overstate your deductions – and rests on the government’s ability to prove it.
Tax evasion examples
While numerous tax evasion examples exist, a mere calculation error is not one of them. Rather, the most common examples of tax evasion include the following:
Deliberately destroying your financial records
Concealing your income sources and amounts
Overstating your deductions
Filing a false tax return
Refusing to file your income tax return(s)
Holding assets in someone else’s name
Criminal conviction penalties
Should the IRS file criminal tax evasion charges against you, this is a serious matter indeed. Keep in mind, however, that the IRS carries the burden of proving beyond a reasonable doubt that you did indeed deliberately seek to evade paying the taxes you owed. Nevertheless, should it be successful in proving its allegations, a tax evasion conviction carries substantial penalties, including the following:
As many as 12 months in federal prison and no more than a $100,000 fine for each year you did not file a tax return
As many as three years in federal prison and a maximum $100,000 fine for filing a fraudulent return
As many as five years in federal prison and a maximum $100,000 fine for concealing or misrepresenting your financial information
As many as three years in federal prison and a maximum $250,000 fine for failing to pay your taxes
It goes without saying that engaging in tax evasion schemes is, at best, highly risky. In addition, the IRS is under no statute of limitations should it wish to sue you civilly for tax evasion. While you cannot go to jail for losing a civil tax evasion suit, the IRS can virtually bankrupt you by demanding back tax amounts, penalties and fees should it prevail. This is educational information only and not intended to provide legal advice.