3 Common Tax Evasion Schemes

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Take note: The IRS is always watching. Many people and businesses try to get around the IRS and their rules by enacting in tax evasion schemes that let them avoid paying parts or all of their taxes. These schemes never end well for people, who often go bankrupt or land in jail as a result. Here are three of the most common tax evasion schemes.


Pyramiding taxes is when a company fails to pay the IRS the taxes withheld from wage checks. For many companies who do this, they use that money as capital. This is an illegal practice that the IRS continues to crack down on.

False Returns

This occurs when someone understates their amount of income, allow too many deductions or exemptions or take credits that aren’t due. When this happens, the person who files the return, whether that is the business owner or someone else in the company, is liable should the IRS realize the misgivings. Businesses who fail to file a return altogether will face criminal charges.

Paying in Cash

When an employer pays their employees in cash and fails to report the full amount that was paid, that is considered tax fraud. Often, when this occurs, the employee is also participating in the fraud by not reporting the amount in his or her own tax filings. Since this results in a lower amount being paid to Social Security and Medicare, the IRS is not keen on this practice and often cracks down on repeat offenders. Both the employer and employee will be charged with tax fraud.

If you’ve been involved in a tax scheme or feel that you don’t have a handle on your taxes, contact the tax professionals at Levy Tax & Associates. We’ll work with you to get your taxes back on track and get back into good standing with the IRS.

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