What is Tax Evasion?Tax evasion refers to using illegal methods to avoid paying your taxes in full. For example, you may fail to submit the relevant tax filing forms then refuse to remit any amount even after an assessment. Since the IRS can determine the taxes you owe them using documents sent by third parties like your employer, they can easily detect evasion. This issue will then lead to penalties and criminal charges depending on the gravity of the situation.
What is Tax Fraud?
Tax fraud is the deliberate misinterpretation of information regarding your taxes or failing to include some details on your return forms. An example is when you do not disclose all income sources to reduce the amount due.
Other examples of tax fraud are:
- Using the wrong social security number
- Claiming false deduction
- Claiming personal expenses as business spending
- Filing under the incorrect status