What does the IRS consider evading behavior?

On Behalf of | Oct 23, 2020 | tax law | 0 comments

Illinois residents like you have paid taxes for years. Sometimes, it can feel like a constant battle between you and the IRS to get the most money back or pay as few taxes as possible.

While avoiding behaviors are not criminal and are in fact perfectly legal, this is not true for evading behaviors. The IRS considers evasion and related activities to be fraudulent or criminal.

Avoidance vs. evasion

The Internal Revenue Services (IRS) have a handbook detailing tax crimes. They mention that there are legal ways to minimize, reduce or avoid personal income taxes. But while avoidance is legal, evasion is not.

For example, there is avoidance versus fraudulence. It comes down to intent. If you conceal, misrepresent or make things appear as they are not, this is potentially fraudulent behavior. If the IRS determines you did this with criminal intent, you could face severe penalties. People convicted of tax fraud can face up to 5 years in jail and fines of up to $250,000. Refusing to file a return or maintain records can result in 1 year in jail and a fine of up to $100,000.

Examples of tax evasion

Other examples of intentional fraudulent behavior include:

  • Using a fake social security number
  • Underreporting income on purpose
  • Taking cash payments and refusing to deposit them to avoid tax consequences
  • Concealing financial accounts from the IRS
  • Falsely claiming business expenses when they were personal expenses
  • Claiming an exemption for a dependent you did not support

Many other examples of fraudulent behavior exist, too. You want to tread carefully when working around taxes. Double or triple-check to ensure you are avoiding taxes and not evading them.