What is a Tax Evasion?

Tax Evasion is a common violation of the IRS tax rules in the process of filing annual tax returns. In order to protect our readers from any possible mistakes, we have collected several examples of tax evasion. In this world, even a minor step on your part may become a reason for tons of issues within your business. But before presenting our examples of tax evasion, let’s try to understand what a Tax Evasion is.

Tax Evasion

There is a significant number of taxpayers who prefer solving their tax issues by making extremely bad decisions. However, in most cases, these bad decisions have a very negative impact and can lead to very serious issues within your business. Compare to tax fraud, tax evasion is a criminal infringement, which mostly occurs when a person intentionally escapes from tax liabilities. Let’s look at several tax evasion examples in order to clearly understand how it works.

Examples

1. Let’s say Mark has a solid income, which he receives generally in cash. The salary is not deposited to his bank account. Of course, there is nothing illegal that he is receiving the income in cash, but there is always one “but”. Mark does not report this money on his tax report. He knows the exact amount of his income, but he knowingly doesn’t report it on his tax return. So, it is considered to be a fatal decision, since Mark puts his entire business under risk.
2. Here’s another example! David has a foreign investment, which allows him to turn a really good profit, and, of course, David should report it to the IRS. Sometimes, when David is asked about having any foreign accounts or income, he doesn’t say anything! In order not to disclose his foreign accounts, he keeps it a secret. In this case, he violates IRS tax evasion law.
3. Michael is a W-2 employee who has a really good income. So, he doesn’t want to report the real amount of his income. Suddenly he decides to create a consulting business and claim all the expenses as business deductions. Here is the thing, his actions are also considered to be a rude violation of tax evasion status.

International Tax Evasion

When it comes to international taxes, the rates are incomparably higher. There is a huge number of annual reporting forms that should be field with tax return. If you try to escape from filing these forms, you can face lots of penalties and unnecessary consequences. Therefore, before making any statement, consult a professional attorney who will guide you throughout  this process.

So, if you are a business owner who has also foreign assets or investments, and who doesn’t know how to deal with the tax reports, consult Prestige Auditors! We will guide you through the whole process of your tax filing in order to avoid any unpleasant situation with the IRS.