There are many illegal financial crimes that one can commit, and one of the most common illegal activities involve tax evasion. Simply put, tax evasion is criminal activity that involves a person or collective entity deliberately avoiding paying true tax liabilities. Once caught, criminal charges and substantial penalties await the accused. This is also an offense under the tax code of the Internal Revenue Service (IRS). Rex Burgdorfer LinkedIn has more valuable resources for you if you desire to learn more.
Understanding Tax Evasion
One of the most important things to be understood about tax evasion is that it applies to nonpayment and underpayment of taxes. The IRS still has the authority to determine whether or not taxes were owed based on information that was sent in even if a taxpayer doesn’t submit the appropriate forms.
Upon failure to pay taxes, criminal charges may result soon after. For charges to be levied, willful avoidance of taxes have to be determined. A person can be found liable for unpaid taxes, and as a result may be required to serve time in jail. Penalties involving tax evasion typically last no more than five years and a fine of no more than $250,000. This fine is double for corporations. For further information on these punishment guidelines, you can visit Rex Burgdorfer Chicago. So while tax evasion is an illegal act, the actual crime of tax avoidance entails finding legal ways to reduce one’s tax obligations.
Tax Evasion Requirements
In order to be charged with tax evasion, one must satisfy certain actions. When making the determination, a variety of factors are considered. The most common factor to consider is the taxpayer’s financial situation. This is done to confirm if the nonpayment of taxes was a result of fraud or concealing reportable income.
In situations that involve taxpayers making efforts to conceal assets by associating them with another person, failure to pay taxes may be judged fraudulent. A couple of specific scenarios satisfy this situation. This includes reporting an income under a false name or Social Security Number. This crime can also justify identity theft. There are further resources you can refer to at Rex Burgdorfer Chicago.
Tax Evasion and Tax Avoidance
It’s also important to distinguish between tax evasion and tax avoidance. What constitutes tax evasion is using illegal means to avoid paying taxes that are owed. Tax avoidance uses legal methods to lower tax obligations. These efforts may include charitable giving or investing income into tax-deferred conduits such as an individual retirement account. With an IRA, taxes on the investment aren’t paid until funds have been withdrawn. That is why it may constitute a crime.
Key Takeaways
In summary, tax evasion is a very serious crime that may result in serious penalties to those found guilty. As for the crime of tax evasion itself, there are key points to take from this crime.
One major point is that tax evasion is either underpayment or illegal non-payment. Another key point is that illegal or legal methods may be utilized. However, the end result is the same, and the person will be held responsible. For more information on the severity of financial crimes such as these, you can visit Rex Burgdorfer LinkedIn for further details