December 7, 2007, Newsletter Issue #40: Tax Evasion

Tip of the Week

Tax evasion is an illegal act under the IRS tax law. When you partake in any of the following activities, you are committing tax evasion:

Knowingly not reporting income, Underreporting income, or Providing false information to the IRS which results in improper income reporting, or Deliberately underpaying taxesUnderstating a reportable transactionSubstantially understating your taxes. This involves having the amount of your income taxes on your return being substantially less than the actual tax amount that you owe the IRS. Whenever you are involved in tax evasion, in general, the severity of the action will determine whether you face an IRS tax evasion penalty or a criminal action case. For instance, substantial transactions will more likely face criminal action whereas a smaller amount transaction will face a penalty. That is a general statement. The entire subject area of tax evasion can be complex with varying factors determining what treatment the IRS will give it.

As can be seen, in order to commit tax evasion, you must not be using any good faith. Plus, you had every intention of committing this crime. You are exhibiting a blatant disregard for the IRS tax laws. A blatant disregard consists of being reckless, careless, or having intentional actions.

The penalty for tax evasion is criminal in nature. This means that you may be facing criminal prosecution for it.

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