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Is Tax Evasion a Federal Crime?

Is Tax Evasion a Federal Crime?

We’ve all heard of “tax evasion” and that it’s definitely not something you want to be caught doing. But do most of us actually know what tax evasion entails?

Is it a crime? Is it a felony?

Up ahead, we’ll take a look at the definition of tax evasion and what you should know about it as a tax-paying citizen.

What Is Tax Evasion?

Tax evasion is a criminal offense involving deliberate avoidance or unwillingness to pay taxes. Tax evasion may be committed by individuals or entities, and it can involve complete non-payment of taxes or underpayment of taxes. The crime of federal tax evasion is considered a felony by the IRS tax code and may be punishable by heavy fines and years of jail time.

Methods for tax evasion

There are many instances that may constitute tax evasion according to the IRS. The most common forms of tax evasion include:

  • Failing to pay taxes due (nonpayment or underpayment)
  • Underreporting taxable income
  • Claiming false business expenses
  • Keeping inaccurate financial statements
  • Falsifying documents
  • Claiming illegitimate tax benefits

Tax Evasion Vs. Tax Avoidance Vs. Tax Fraud

Many people confuse the terms “tax evasion,” “tax avoidance,” and “tax fraud.” However, these terms have quite different definitions.

What is the difference between tax avoidance and tax evasion?

While tax evasion is considered a criminal felony, tax avoidance is actually not a crime at all. In fact, it’s wise to “participate” in tax avoidance. The term simply refers to structuring your personal or business finances in a way that allows you to keep the most money and pay the least in taxes to the government — all by legal means. Tax evasion, by contrast, does involve paying less to the government, but it must involve some form of concealment or deceit.

What is the difference between tax fraud and tax evasion?

Tax fraud means defrauding the government of tax due in any way. It’s a challenge for the government to prove that someone has committed this overarching crime because a mistake on your taxes doesn’t automatically mean you intentionally were trying to defraud the government. Overall, tax fraud encompasses a long list of possible offenses. Tax evasion is essentially one of those possible offenses.

How Long Do You Go to Jail for Tax Evasion?

You can go to jail for up to 5 years for tax evasion. The US Internal Revenue Code, Section 7201 reads:

“Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.”

While the idea of going to jail for tax evasion can be frightening, it’s important to know that very few people go to jail for this crime. Still, you don’t want to be one of the unlucky few who are charged with the harshest punishment. This is where a qualified attorney can help.

Contact an Experienced Criminal Defense Attorney

If you are under investigation for tax evasion or other tax-related crimes, it is in your best interest to hire an experienced tax and criminal defense lawyer as soon as possible. They will ensure that evidence is not unfairly procured by prosecutors and that your rights are fully protected throughout the investigation process.

Contact the legal team at Premier Criminal Defense in San Diego to learn more about your rights and defense for federal crimes.