What is Tax Evasion? A Simple Look

We’ve all heard about it. We all remember how the Joker was more afraid of its repercussions than he was afraid of the Batman…

But what exactly is 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 evasions. That’s because even a minor wrong step from 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 Tax Evasion actually is

Evasion of the Taxpayers

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

Let the Scenarios Unfold

1. Let’s say a Mark has a solid number of cash income, which is not being deposited in a bank account. Of course, there is nothing illegal about receiving your income in cash; however, there is one “but”. Mark does not report this money on his tax report. He knows the exact amount of his income, but he knowingly does not report it on his tax return. So, it is considered to be a fatal decision, since Mark puts his entire business under risk.
2. David has a foreign investment, which allows him to turn a really good profit, and, of course, David should report it to the IRS. There are several times when David is asked about having any foreign accounts or income, and he mentions “no” in order not to disclose his foreign accounts. In this case, he has violated IRS tax evasion laws.
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 and decides to create a consulting business and claims all the expenses as business deductions. Here is the thing, his acts are also considered to be a rude violation of tax laws.

 

International Tax Evasion

Keep in mind that when it comes to the international taxes, the rates are incomparably higher. There are huge numbers of annual reporting forms that should be filled with tax returns. If you try to escape filing these forms, you can face lots of penalties. Therefore, before making any statements, it is extremely important to consult a professional attorney who will guide you in this process.

So, if you are a business owner who has also foreign assets or investments, and do not know how to deal with your tax reports, consult Prestige Auditors, and we will guide you through the entire tax filing process in order to avoid any unpleasant situations with the IRS. Trust us, if the Joker was afraid of the IRS, there was good reason for it!