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Tax Evasion, a White Collar Crime

Given the fact that it’s the end of April, we can’t help but have taxes on our mind. Of course, every April people have to file their state and federal taxes. Some people will send in their taxes without a problem, while others will get audited. Then, there’s always a group of individuals who will capture the wrong kind of attention from the Internal Revenue Service (IRS) and will be charged with tax evasion – a serious federal offense.

What is tax evasion exactly? It has to do with the willful act of not paying one’s tax liability. Individuals and businesses alike can commit the offense of tax evasion, and it can relate to local, state or federal taxes. So, how does someone commit tax evasion?

Tax evasion includes but is not limited to:

  • Failing to report income
  • Making false claims
  • Filing a false tax return
  • Willfully not filing tax returns
  • Willfully failing to pay the taxes due
  • Underreporting one’s income
  • Working for cash and not reporting the income
  • Filing under someone else’s name or Social Security number

As we mentioned earlier, both individuals and businesses can commit tax evasion. Often, business owners commit tax evasion is buy accepting cash from clients and paying their employees in cash and not reporting the cash payments. In turn, the employees can commit tax evasion by not reporting their cash income.

Tax fraud and tax evasion are basically the same thing. Fraud has to do with intentional misrepresentation or willful deceit, and tax evasion involves the same elements. When people commit tax evasion, that’s what they’re doing – willfully deceiving the IRS so they can reduce or eliminate their tax obligations.

Consequences of Tax Evasion

Tax evasion is a serious white collar crime under Title 26 USC § 7201. The penalties for tax evasion include up to 5 years in prison, or a fine not to exceed $250,000 for individuals and $500,000 for corporations, or both a fine and imprisonment.

Who commits tax fraud the most? Service-based workers; for example, hair stylists, house cleaners, massage therapists, dog groomers, caterers, and gardeners who deal in a lot of cash. Also, some self-employed individuals who are sometimes paid in cash commit tax evasion. These people tend to commit tax evasion because it’s easy for them to hide their cash income.

If you’re under investigation for tax evasion, you could face hefty fines and imprisonment upon conviction. In the face of federal charges, contact the Law Offices of Virginia L. Landry, Inc. to schedule a free, confidential consultation.