Tax evasion is more common than you might think. Studies have suggested that nearly 20% of Americans’ total reportable income is improperly reported to the Internal Revenue Service each year. Ensure you know the answer to the question, “What is tax evasion?” to avoid committing this white-collar crime.
If you ever commit tax evasion, it could result in you being subjected to an IRS investigation. It could also lead to you facing financial penalties from the IRS and potentially even criminal penalties. This explains why it’s important for American taxpayers to have a solid understanding of tax evasion.
Discover everything you need to know about tax evasion below.
It’s pretty easy to answer the question, “What is tax evasion?” Tax evasion is any nonpayment or underpayment of income taxes to the Internal Revenue Service.
However, all tax evasion cases aren’t created equal. Here are several examples of tax evasion:
Failure to file is also one of the many basic forms of tax evasion.
To be clear, the IRS doesn’t automatically assume tax evasion if you make one or two mistakes while filing your taxes. However, if the agency believes you demonstrated willful intent while filing taxes improperly, the IRS may investigate you.
Other federal agencies that might be involved in tax evasion investigations include the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Drug Enforcement Agency (DEA), and the Federal Bureau of Investigation (FBI).
If you’re under investigation for possible tax fraud, you’ll typically find out by receiving a target letter in the mail from the U.S. Department of Justice. This letter will reveal what you’re being investigated for. It will also request documentation and ask you to contact the appropriate agency, including deadlines you must follow.
Receiving a letter like this will likely send your anxiety levels soaring. You may wonder, “What is tax evasion — and why am I being accused of it?!”
Rather than remaining in a state of panic, the right course of action is to contact a tax fraud professional. They will read through the target letter you received and help you take the right steps.
A tax fraud professional will explain the situation further and begin piecing together a solid defense strategy for your case. This may help you avoid the fines and other penalties, including jail time, that accompany a tax fraud conviction.
To avoid being accused of tax evasion, consider hiring a tax professional to handle filing your income taxes. They will ensure your taxes are filed properly and minimize the chances of you being accused of tax evasion.
At the same time, they will also pinpoint legal deductions that you may claim to reduce your tax liabilities while staying within the limits of the law. Additionally, they will answer questions like, “What is tax evasion?” and any other questions you might have.
After finding out the answer to the question, “What is tax evasion?” you should see just how serious it is. If you’re found guilty of this crime, you could spend time behind bars and face large fines and other penalties.
Let a tax professional from Levy & Associates help you steer clear of these penalties and more. Contact us at 313-447-1704 or fill out this brief form to schedule a consultation.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.