What Is Tax Evasion?

There are several types of federal taxes in the U.S., and at different times and for different reasons both entities and individuals are required to pay these taxes. The intentional and purposeful non-payment of owed and due federal taxes, no matter what type, is called tax evasion or tax fraud.

The defendant must further have evaded or avoided payment of these applicable taxes through illegal means. However, a very wide range of actions can be unlawful or illegal in the context of tax evasion.

Tax evasion includes the decision not to pay part or all of your federal income taxes or a business decision not to report all sales tax on merchandise. Tax evasion can be concealing part of an inheritance from the Internal Revenue Service or misrepresenting property value to avoid federal property tax.

What Is the Law on Tax Evasion?

Tax evasion is a federal crime under Section 7201 of the U.S. Code. This particular statute provides the definition and elements for the evasion or attempted evasion of federal taxes. A prosecutor wanting to win a conviction for tax evasion must prove each of these elements beyond a reasonable doubt.

Section 7201 also states the potential punishment for a conviction of tax evasion in the U.S.

According to the statute, tax evasion is:

  • Any willful attempt;
  • Carried out in any manner or means;
  • To evade or defeat an assessed or requirement payment;
  • Of any tax imposed by U.S. law.

Under this definition of tax evasion, the defendant must intend to evade or refuse payment of federal taxes. It can’t be an accident, mistake, or reckless act. For example, if you attempted to calculate your own income tax for last year and made a mistake in the calculation, it isn’t a federal crime. Of course, you must have proof that the suspected tax evasion was actually an accident.

Accused of Tax Evasion? Here are the First Steps

The Internal Revenue Service (IRS) performs regular audits on the income tax filings of individuals and sales and revenue tax filings for companies. More than likely you know of someone required to undergo this audit. As part of this process, you must locate all evidence and information used to inform your tax filing, and you need to provide this documentation to the IRS. These audits and other investigations by the IRS, FBI, and federal agencies can lead to charges for federal tax evasion.

If you are charged with tax evasion, you are facing a felony offense that may result in five years in federal prison and a fine of $100,000, or more if convicted of tax evasion by an entity. You need to take immediate action, including:

  • Contact a tax evasion lawyer;
  • Perform an internal, confidential audit on your financial records;
  • Cease any activity that could be suspected of tax evasion;
  • Collect any and all documents relevant to your tax filings; and
  • Only speak with an investigator or federal agent on the advice of your lawyer

Why a Lawyer Should Be Your First Call

A tax evasion lawyer is with you for the entirety of a federal criminal case. Your lawyer will build your defense to tax evasion charges, handle the collection of evidence and due diligence, and ensure your rights are respected during the criminal justice process.

Given the depth of legal responsibility, you need a lawyer that you can trust and rely on throughout this process.