Gale Law Group
711 N Carancahua St Suite 514
Corpus Christi, TX 78401
361.808.4444

Tax Evasion

Tax evasion is an illegal activity that involves the deliberate avoidance of paying a true tax liability. Anyone who is caught can be subject to criminal charges that will result in severe penalties, and it applies to both the nonpayment and underpayment of your taxes. Even if you haven’t submitted the proper forms, the IRS can still find out what you owe based on any information that third parties are required to send (including W-2 forms and 1099’s). But you’re usually not considered guilty unless your failure to pay was intentional.

The Differences Between Tax Evasion and Tax Avoidance

While tax evasion is a serious crime, it shouldn’t be confused with tax avoidance (which is the legitimate minimization of taxes while maximizing your after-tax income). This can be accomplished by using certain methods included in the tax code. Businesses and self-employed individuals can avoid the payment of taxes by taking any legitimate deduction and credits, but they can also shelter any income from tax liability by setting up employee retirement plans or any other accounts that are attached to the business.

Tax evasion involves the use of certain illegal means to keep from paying taxes, which is usually done by hiding or misrepresenting income. Be sure to speak to a qualified attorney for more information.

tax evasion
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Common Examples of Tax Evasion

Tax evasion generally involves the intentional failure to report income or not filing an income tax return. Some common practices that are considered tax evasion include:

  • Under-reporting your income.
  • Not reporting a particular source of income.
  • Giving the IRS false information about business income or expenses.
  • Deliberately underpaying the taxes you owe.
  • Understating your taxes by a significant amount.
  • Overstating the amount of deductible expenses.
  • Keeping two sets of books.
  • Making false entries in your books or records.
  • Claiming personal expenses as business expenses.
  • Claiming false deductions without having the documents to support them.
  • Hiding or transferring assets or income.

Tax evasion isn’t just limited to income tax returns. Businesses that have employees might be committing tax evasion in a number of ways, which can include:

  • Not withholding federal income or FICA taxes from employees’ paychecks.
  • Failing to report the payment of payroll taxes.
  • Hiring an outside payroll service that doesn’t turn over funds to the IRS.
  • Paying employees in cash without reporting them.
  • Filing false payroll tax returns or not filing them at all.

Taxpayers sometimes make mistakes. This is considered negligence instead of intentional tax fraud, but the IRS will most likely send you a notice of any penalties or interest due.

Tax Evasion as it Relates to Trust Funds

The term “tax evasion” often relates to individual income taxes, but it can also be committed by businesses on state sales and employment taxes. A common way for a business to evade taxes is by failing to turn over taxes they have collected from customers to proper state or federal agencies. These taxes are called “trust fund taxes” because they’re given “in trust” to a business under the expectation that they’ll be turned over to the proper government agency, and failing to do so can result in tax evasion penalties (which can include hefty fines).

Possible Tax Evasion Penalties

According to the Internal Revenue Code, the willful attempt to “evade or defeat any tax law” is a felony offense. And if you’re convicted, you can be subject to a fine of up to $250,000 (up to $500,000 if you’re a corporation), a prison sentence of up to five years, or both. This is in addition to court costs related to your prosecution. Tax evasion is part of the overall definition of tax fraud, which is the illegal non-payment of taxes. Fraud is considered to be “an act of deceiving or misrepresenting,” which is exactly what tax evaders do. They’re attempting to deceive the IRS about their income and expenses, which can be prosecuted by the Criminal Investigation Unit under the broader definition of “tax fraud.”

Your Choice for a Criminal Defense Attorney in the Coastal Bend!

If you’re looking for a criminal defense attorney in Corpus Christi that can help you with your tax evasion case, Gale Law Group is here to help. Our team can not only make sure your rights are protected, but we’ll also help you come up with a solid case in court. If you’re being charged with a serious crime, you don’t want to go through it alone. Be sure to reach out to us, so you can find out why we’re one of the best choices for a criminal defense attorney in the Coastal Bend!