Tax evasion is the deliberate attempt to avoid paying taxes that are legally obligated by a taxpayer. This can be done through a variety of methods such as concealing income or assets, reporting inaccurate deductions, and falsifying documents. Tax evasion can include non-payment or underpayment of actual tax liabilities and can happen even if tax forms are filed with the Internal Revenue Service (IRS). It is important to note that simply not paying taxes does not necessarily constitute tax evasion.

In order for the IRS to accuse a taxpayer of tax evasion, they must be able to prove that the avoidance of taxes was willful on the part of the taxpayer. This means that if it can be demonstrated through investigation that the taxpayer purposely refrained from paying taxes due to negligence, willful disregard or an intent to deceitfully reduce their tax liability, the IRS can charge criminal penalties.

Tax evasion carries criminal penalties such as civil and criminal fines and imprisonment, and can result in legal fees and taxpayer education requirements. Consequences are not limited to the taxpayer – third-parties, such as accountants, attorneys, and financial advisors, may also be held liable for assisting taxpayers in concealing or fraudulently reporting information.

It is important to distinguish between tax evasion and tax avoidance. Tax avoidance describes finding legal ways, within the tax law, to reduce taxpayer obligations. Tax avoidance is always a legitimate form of tax planning and seeks to reduce the amount of tax responsibility a taxpayer has. Any legitimate tax avoidance strategy is typically encouraged by the IRS and is the smart move for taxpayers seeking to reduce their overall tax liability. On the other hand, tax evasion is the deliberate breaking of the law to purposely reduce or eliminate taxes that are due and is strictly illegal.

Any taxpayer who suspects they may be guilty of tax evasion should contact the IRS immediately and discuss payment plans, amnesty programs, or to arrange corrective measures.