5 Things to Know About Tax Evasion

Jul 1, 2020 | Tax

Tax evasion is a specific criminal allegation. An error, unpaid tax bill, civil penalty, and criminal charge are not interchangeable.

  1. Intent matters. Federal tax evasion under 26 U.S.C. § 7201 generally requires willfulness, a tax deficiency, and an affirmative act of evasion. The IRS distinguishes deliberate conduct from an honest mistake. A mistaken return can still require correction and payment.
  2. A tip is not proof. A complaint from an ex-spouse or anyone else can prompt inquiry, but the evidence must support the legal elements. Preserve returns, records, communications, and preparer information.
  3. Civil and criminal paths differ. The IRS can assess civil penalties or refer suspected criminal conduct for investigation. A civil fraud penalty is not a criminal conviction, and the standards of proof differ.
  4. Not every unpaid tax is evasion. Inability to pay should be addressed promptly, but it alone does not establish the willful affirmative conduct required for tax evasion. Other filing and payment laws may apply.
  5. Payment options have criteria. An offer in compromise or installment agreement may be available to eligible taxpayers; neither is guaranteed and neither automatically resolves a criminal investigation.

If contacted about a suspected tax crime, seek advice from a qualified tax and criminal defense lawyer before responding substantively. Roy J. Kahn, P.A. handles criminal defense matters in Miami. No outcome or reduction in penalties is guaranteed.

This is general information, not tax or legal advice.