tax evasion: an overview
Tax evasion is using illegal means to avoid paying taxes. Typically, tax evasion schemes involve an individual or corporation misrepresenting their income to the Internal Revenue Service. Misrepresentation may take the form either of underreporting income, inflating deductions, or hiding money and its interest altogether in offshore accounts. The U.S. Government projects that fiscal year 2007 resulted in the government losing $345 billion because of tax evasion.
Individuals involved in illegal enterprises often engage in tax evasion because reporting their true personal incomes would serve as an admission of guilt and could result in criminal charges. Individuals who try to report these earnings as coming from a legitimate source can face money laundering charges.
In the United States, tax evasion constitutes a crime that may give rise to substantial monetary penalties, imprisonment, or both. Section 7201 of the Internal Revenue Code reads, “Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.”
Proof of the crime requires first proving the attendant circumstance that an unpaid tax liability exists. Second, the prosecution must prove some affirmative act by the defendant to evade or attempt to evade a tax. Third, prosecutors most show that the defendant possessed the specific intent to evade a known legal duty to pay. To convict, the jury must find the defendant guilty of each of these elements beyond a reasonable doubt.
See Tax Crime.
See also White-collar crime; Tax Law.
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U.S. Constitution and Federal Statutes
- U.S. Constitution
- U.S. Code: 18 U.S.C. - Crimes and Criminal Procedure
- CRS Annotated Constitution
Federal Court Rules
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- Nolo: Criminal Cases, Crimes In-Depth, and More
- ABA Criminal Justice Section, Committee on Criminal Procedure, Evidence and Police Practices Committee
- Litigator's Internet Resource Guide: rules of court
- Federal Judicial Center Publications
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- House Judiciary Committee
- Vera Institute of Justice
- Nolo: Taxes, Audits, Tax Debts, and More