If you’re required to pay federal income tax, and you probably are, it’s critical that you do so with good intentions. Sure, you may make mistakes every now and again, but as long as you have the right intentions you should never find yourself facing criminal charges.
Conversely, it’s not out of the question to come face to face with tax evasion charges. Should this happen, it’s critical to learn more about this crime, ranging from the penalties to possible defense strategies.
Generally speaking, there are two forms of tax evasion:
- Evasion of assessment: This is when you take action to avoid the assessment of a tax.
- Evasion of payment: This is typically associated with the hiding of assets or money on which you’re expected to pay taxes. Attempting to hide assets in an off-shore account fits into this category.
Examples of tax evasion
Although tax evasion comes in many forms, here are some of the most common actions that could lead to this type of trouble:
- Concealing income sources, such as if you’re paid in cash
- Filing a false tax return
- Keeping two sets of books and records
- Taking deductions and credits you don’t qualify for
- Destroying records in an attempt to hide your wrongdoings from the authorities
- Creating false invoices
The penalties are severe
Above all else, remember that tax evasion charges don’t always result in a conviction. You have the opportunity to defend yourself in court, and doing so gives you the ability to lessen your punishment or even have your case thrown out.
The penalties associated with tax evasion are associated with the type of crime. For example, if you fail to pay your taxes entirely, you could be hit with a fine up to $250,000 and three years in prison.
The more you know about tax evasion, the greater chance there is that you’ll avoid trouble with the IRS (among other tax authorities). However, there’s always a chance you could come face to face with criminal charges.
Should this happen, learn more about your legal rights, defense strategies and other steps you can take to avoid punishment and clear your name.