What is Tax Evasion?

The approach of the deadline for filing income tax returns provides the perfect opportunity to discuss the crime of tax evasion. A part of the numerous white collar crimes, tax evasion is criminalized under both state and federal law and can be committed in several different ways.

What is Tax Evasion?

Many people actively attempt to pay as little in taxes as possible, such as by claiming deductions when they fill out their tax return. There are many perfectly acceptable ways to reduce the amount of tax owed to the government. The IRS specifically distinguishes between avoidance and evasion of taxes. Avoidance does not involve any concealment or misrepresentation.

On the other hand, an unacceptable way to lessen tax liability is evasion, which is the process of using illegal means to avoid paying taxes, usually through misrepresenting income. This can be accomplished in several ways, such as by underreporting income, inflating or claiming fictional deductions, or hiding money completely.

Tax evasion may be committed because money was obtained through illegal means. Reporting that money on an income tax return not only subjects it to taxation, it also raises questions as to how the money was earned. Alternatively, money obtained illegally is sometimes represented as being obtained through legitimate means under the crime of money laundering. Both of these offenses are often associated with organized crime activity. But, it is important to remember that tax evasion may also be committed by a person who is merely trying to avoid paying taxes, even when their income was earned completely legitimately.

Federal Statute

Under federal law, tax evasion is committed when a person willfully attempts to evade or defeat any tax imposed by the IRS. The crime is a felony punishable by a fine of up to $100,000 and/or imprisonment of up to five years. If a corporation commits tax evasion, the potential fine is up to $500,000.

In order to convict a person of tax evasion, three elements must be proven:

  1. A voluntary, intentional violation occurred of a known legal duty to pay the tax;
  2. An affirmative attempt was made to evade or defeat paying the tax; and
  3. An unpaid tax liability exists.

The government has the burden of proof and, for criminal cases, must prove tax evasion beyond a reasonable doubt. Critically, the government does not need to prove the amount of tax owed with precision. Rather, it only needs to prove that the amount owed is substantial.

Florida Statutes

Pursuant to Florida law, it is illegal for any taxpayer to willfully fail to file a tax return, file a fraudulent return, or willfully attempt to evade or defeat any tax. The offense is considered a first degree misdemeanor, punishable by a fine of up to $1,000 and imprisonment of up to one year. It is also a crime to aid, abet, counsel, or conspire to commit any of the offenses listed above, with the same penalties for a conviction.

South Florida Defense Firm

If you have been accused of tax evasion, you face potentially significant penalties. It is likely you will be investigated by both state and federal authorities. To protect your rights, you should contact the South Florida attorneys at Farkas & Crowley, P.A. We want to put our experience to work for you.