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What constitutes tax evasion?

As a New York taxpayer, you likely have a healthy respect for the Internal Revenue Service, if not an actual fear of this all-powerful governmental entity. You likely also do everything possible to make sure you file your taxes every year by April 15 and pay whatever taxes you owe.

Whether you compute your own taxes or hire a company to prepare them for you, however, you probably occasionally worry about what will happen if you or your tax preparer makes a mistake. Will the IRS charge you with tax evasion? As FindLaw explains, the answer is “no.” Tax evasion applies only to deliberate attempts you make to understate your income or overstate your deductions – and rests on the government’s ability to prove it.

Tax evasion examples

While numerous tax evasion examples exist, a mere calculation error is not one of them. Rather, the most common examples of tax evasion include the following:

  • Deliberately destroying your financial records
  • Concealing your income sources and amounts
  • Overstating your deductions
  • Filing a false tax return
  • Refusing to file your income tax return(s)
  • Holding assets in someone else’s name

Criminal conviction penalties

Should the IRS file criminal tax evasion charges against you, this is a serious matter indeed. Keep in mind, however, that the IRS carries the burden of proving beyond a reasonable doubt that you did indeed deliberately seek to evade paying the taxes you owed. Nevertheless, should it be successful in proving its allegations, a tax evasion conviction carries substantial penalties, including the following:

  • As many as 12 months in federal prison and no more than a $100,000 fine for each year you did not file a tax return
  • As many as three years in federal prison and a maximum $100,000 fine for filing a fraudulent return
  • As many as five years in federal prison and a maximum $100,000 fine for concealing or misrepresenting your financial information
  • As many as three years in federal prison and a maximum $250,000 fine for failing to pay your taxes

It goes without saying that engaging in tax evasion schemes is, at best, highly risky. In addition, the IRS is under no statute of limitations should it wish to sue you civilly for tax evasion. While you cannot go to jail for losing a civil tax evasion suit, the IRS can virtually bankrupt you by demanding back tax amounts, penalties and fees should it prevail. This is educational information only and not intended to provide legal advice.

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Law Office Of Scott G. Cerbin, Esq., PLLC
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Law office of Scott G. Cerbin ESQ., PLLC