Many of us don’t know much about tax evasion, yet knowingly or unknowingly we evade tax and then end up paying a big price later. Tax evasion is avoiding paying your taxes and then failing to report it, the most common one being the failing to report the financial gain. The government authority imposes strict and heavy penalties for evasion.
What is tax evasion?
Tax evasion is totally different from minimizing tax, which is the process of using legal strategies to reduce tax due. There are several deductions that you can use to scale back your liabilities, if you have got medical expenses or if you are thinking to pay for your retirement plans. Taking advantage of them and keeping your bill to a minimum is legal. However, once corporations, people, or the other legal entities avoid their tax, that’s evasion and therefore the penalties are severe with jail terms and hefty fines.
The Internal Revenue Service (IRS)
The IRS defines the regulation of taxes. It prosecutes anyone or any entity that avoids payment of taxes due, and might assess penalties on them. The IRS has many special agents that are trained to collect the knowledge needed to observe evasion. They need access to tax returns and the ability to issue summons for access to additional financial data. They have therefore the right to seize financial asset including money if they find anything illegal.
Don’t be in the dark
The IRS audits some taxpayers indiscriminately every year, however most audits are results of uncommon activity. If someone claims plenty of deductions in proportion to their financial gain, or if someone with plenty of assets declares a little financial gain, the process of audit follows. If it’s established that taxes are knowingly evaded, the IRS will levy tax liens, freeze any money in the guilty person’s accounts, seize assets. Every property owned by the guilty payer will be confiscated and sold-out at auction if nothing is formed to repay the liability.
Everyone that’s involved in an evasion of liabilities are examined and detected by the IRS. You can go for professional help if you don’t understand anything but don’t avoid your tax dues. You must know that you can be charged with serous crimes in matter of your taxes.
There are three types of most serious charges:
- Tax evasion: This is indeed a law-breaking crime and a conviction can carry a jail sentence with hefty fines.
- Filing a false return: If the payer files a return, it is often a law-breaking situation and might end in a jail sentence of up to a few years with fine amounts to pay.
- Failing to file a tax return: This is often an infringement and might end in most likely a jail sentence of one year with fines for every year that no tax return was filed.
Many individual taxpayers place their confidence in accountants and business managers to handle their monetary affairs and don’t bother about the standing of their finances. However, the individual payer is liable for the knowledge provided to the IRS. Do yourself a favor and examine your tax returns and don’t leave it to others.