In general, tax evasion occurs when a business or an individual intentionally underpays taxes. However, not all firms and people actually set out to underpay their taxes. Below you will find some common examples of tax evasion so that you could avoid committing them.
Common Tax Evasion Activities
A violation of every single step in the taxation process can easily be tax fraud, and the most common tax avoidance activity is underreporting income. Mainly, employees and businesses that deal mostly in cash like retail storeowners, hairdressers, wait staff, and other similar jobs underreport their actual income.
Likewise, some companies increase their expenses on tax forms and some families sometimes state that they have more household members than they have to take advantage of bigger tax deductions.
The Role of the IRS
Why do they do it? Because the IRS or Internal Revenue Service does not have the means to audit the finances of a business or individual that does not file their tax returns.
On the other hand, if the IRS decides to audit that company or person randomly, they will launch a thorough investigation, and if they suspect tax evasion, they will prosecute them for tax fraud.
Unfortunately, for the honest people, tax filing is tedious, and IRS rules are complex, so unless you are a tax professional or accountant, you might end up making mistakes in your tax return that might come across as tax evasion to the IRS.
Tax Evasion is a White Collar Crime
Fortunately for you, the IRS cannot just charge you with tax evasion, explains a top white-collar criminal law specialist in Houston. It has to prove that you intentionally underpaid your taxes. If you just made a mistake, you would just need to pay what you originally owed, plus some fines, but you will not undergo prosecution for tax evasion.
In the event you are facing charges of tax evasion, the prosecution would attempt to prove that your errors were intentional. That said, it is crucial that you get an experienced attorney to review your case, advise you on tax rules, and help you build a solid case for your trial.