Tax evasion is a serious criminal offense with severe financial and legal consequences if found guilty. To successfully prove their case, the prosecution needs to establish three elements.
Understanding these factors can help determine the best strategy for defense.
1. Willfulness
The defendant acted with the specific intent to evade to evade a tax or the payment of a tax. It was done voluntarily and intentionally, not due to an error or carelessness.
2. An attempt to evade a tax or the payment of a tax
There was actual conduct on behalf of the defendant to circumvent a tax or tax payment.
3. A tax is due and owing
It must be proven that the defendant still owes an amount of tax in addition to what they paid.
People commonly confuse the terms ‘tax evasion’ and ‘tax avoidance.’ However, while tax evasion is illegal, tax avoidance is not. It is entirely legal and involves using tax law to minimize the tax payable. It may include taking legitimate deductions or making certain investments that have tax benefits.
Tax evasion is considered to be a felony offense, and penalties can be severe per the IRS, including:
- A fine of up to $250,000 for individuals and $500,000 for corporations.
- Imprisonment of up to five years
- Repayment of taxes, penalties, and the cost of prosecution
Several possible defenses can help to disprove any of the three elements, such as:
- The defendant was not acting willfully but made an error in underreporting income or overstating deductions.
- The defendant was ignorant of tax laws
- Lack of evidence
- It was done on the advice of a tax professional
Tax evasion is a serious offense; working with someone on a solid defense allows for the best possible outcome in your situation.