One of the flaws of the American tax system is that everyone is expected to file their own taxes, even though most people don’t have much experience or expertise with filing. This can lead to mistakes, which are common. These mistakes can be nerve wracking and might make you to think you’re guilty of tax evasion if you submit an incorrect filing
However, what differentiates tax evasion from negligence is the willful attempt to evade the assessment or payment of taxes. Some examples of tax evasion include:
- Deliberately understating annual earnings
- Overstating the amount of tax deductions
- Destroying or failing to provide tax-relevant records
- Hiding taxable assets from the IRS or holding property in another person’s name
- Accepting cash for jobs in lieu of taxable income
- Refusing to file a tax return
- Creating false invoices or filing a fraudulent return
- Refusing to cooperate with the IRS
- Fraudulent actions or concealment tactics during an investigation
Both individuals and business entities can be audited by the IRS and subsequently charged with tax evasion. This is common with self-employed entrepreneurs who are paid in cash for their services. In these scenarios, it’s easy to be caught in what seems like a white lie. You have a side gig that pays cash, so you only report the earnings from your main job on your yearly taxes. However, all it takes for the truth to be revealed and for you to come under fire for tax evasion is for the IRS to investigate your bank statements.