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Are tax fraud and tax evasion the same thing?

On Behalf of | Dec 16, 2022 | White-collar crimes

Navigating the world of taxes can be complex and confusing. Although most people understand that tax fraud and tax evasion are both penalties for not paying taxes, it’s essential to understand the differences between them. 

What does it mean to commit tax fraud or tax evasion? Let’s take a closer look at these two concepts to see what sets them apart.

The difference between tax fraud and tax evasion

Tax fraud and tax evasion are both illegal activities considered forms of tax abuse. Tax fraud involves using deceptive practices to deliberately underpay taxes owed, such as claiming false deductions or income or falsifying records. 

Tax evasion, on the other hand, is a far more serious offense where a taxpayer purposely fails to report income or take deductions they are not entitled to avoid paying taxes owed. It involves using illegal methods to avoid paying taxes, such as concealing or moving money offshore or hiding assets from The IRS. Tax evasion can also involve willfully misclassifying taxable income as nontaxable, not paying taxes owed on time, and committing fraud by falsifying documents for deductions or credits that should not be claimed. 

Tax fraud and evasion are crimes with significant criminal and financial penalties. Anyone accused of such a crime could face jail time, fines, accounting and legal expenses, government restitution for unpaid taxes, and damage to their professional reputation. 

Facing charges from the IRS is a serious matter that can have long-lasting repercussions if not handled properly. If you have been accused of defrauding the government, you first should seek legal help. You need someone who can review your case and advise you on the best course of action to take.