Tax Forms

Tax Evasion

One of the more common types of crime is tax evasion.

This white collar crime can result in severe penalties if done intentionally. When arrested for this crime, you will be placed in jail until it’s time for the hearing to go to trial. A judge will oftentimes set bail for those charged with tax evasion. Once this occurs, a bail bondsman will need to be contacted. They will provide a document that agrees on the money owed, which should be filled out and signed. Pay this fee to the bail bondsman in order to post bail, make sure that the defendant also signs, and the defendant will then be released. This is a promise that the defendant will return to court when the trial date hits.

What is Tax Evasion?

Tax evasion is a serious white collar crime that basically involves the evasion of due taxes by an individual, business, or trust. This type of crime usually involves the willful attempt to either defraud the IRS or evade current state or federal tax laws. There are numerous examples of tax evasion, including:

  • Intentionally failing to file an income tax return
  • Making false or fraudulent claims on a tax return
  • Preparing and filing a false return
  • Failing to pay the amount of taxes that are due in a willful manner
  • Failing to report all income that was received

Tax evasion can be committed by basically anyone and any entity. However, groups of workers that are most likely to commit some form of tax evasion include service workers who are paid primarily in cash. It’s much easier to under-report cash when compared to other methods of payment. Restaurant servers, doctors, and car dealers are among the most likely to commit tax evasion.

Difference Between Fraud and Negligence

The key to understanding tax evasion is to have a better grasp of the differences between fraud and negligence. The United States tax code is a complex web of laws that dictate how to file your income and what type of income must be filed. The IRS understands this and will typically assume that the error was a simple mistake on the part of the individual paying taxes. It’s possible that the taxpayer could still be levied with a fine in this instance for up to 20 percent of the underpayment.

The IRS searches for common signs that the evasion was actually willful evasion. Auditors will look for certain types of suspicious activity, such as:

  • The falsification of documents
  • Overstating exemptions or deductions
  • Keeping multiple financial ledgers
  • Under-reporting total amounts of income in a willful manner
  • Claiming an exemption for a dependent that doesn’t actually exist
  • Concealing income or transferring income somewhere else
  • Falsifying certain personal expenses as business expenses
  • Using a fake social security number or a SSN that belongs to someone else

Penalties of Tax Evasion

There are many different types of penalties that can be levied against an individual, corporation, or trust in the event that they commit tax evasion. The type of penalty that an entity is charged with depends entirely on the extent of the evasion. For instance, attempting to evade or not pay taxes altogether will usually result in a felony charge that carries with it up to five years in prison, a fine of up to $500,000, or both of the aforementioned penalties. Making false statements also carries with it a felony charge and leads to jail time of up to three years, a fine of up to $500,000, or both.

In the event of a willful failure of filing a return, paying the taxes owed, or supplying information at the date required by law, conviction is denoted as a misdemeanor. There are a wide selection of penalties that can occur with this crime, though the usual include jail time of up to a year, a fine of up to $200,000, or both. Tax evasion is a serious crime, so make sure that you get your tax returns filled out properly.

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