Strategic Federal And State Criminal Defense

What is the difference between tax evasion and tax avoidance?

On Behalf of | Aug 22, 2023 | White Collar Crimes |

As a business owner, you understand the importance of following tax laws and meeting your financial requirements. One of the most critical things you can do is to take steps that will allow you to minimize your tax burden and increase your post-tax profit. It is legal to do this through deductions and careful financial strategy. This is tax avoidance, and not only is it completely legal, but it is wise for business owners to know how to best apply these strategies to their company.

While tax avoidance is both legal and appropriate, tax evasion is not. Tax evasion involves using deceptive methods to conceal the true amount of taxes one owes. Tax evasion is a type of white-collar criminal offense, and if convicted of this type of crime, it can lead to time behind bars and other penalties that have the potential to change the course of a California resident’s life. You will benefit from knowing the distinct differences between tax evasion and tax avoidance.

Common examples of tax evasion

Tax evasion is a criminal act, but it is not always easy to prove that this type of activity is occurring. In some cases, one discovers evasive activities during an audit. In other cases, an investigation into other types of suspected white-collar crime can lead to the discovery of tax evasion. While there are many different ways that both a business and an individual can engage in this activity, the following are some of the most common:

  • Ignoring income sources from overseas
  • Paying for childcare services under the table
  • Not reporting all income from legal sources
  • Obtaining income from illegal sources
  • Using cryptocurrency to hide income

While this type of crime does not involve an element of violence, the consequences of a conviction are potentially life-changing. They include years of incarceration, expensive fines and a felony mark on your criminal record.

A defense against tax evasion charges

Tax evasion is a grave offense, and you would be wise to take the charges against you seriously. If there is any confusion about the potential repercussions you are facing or how you can develop a strong defense strategy, it is in your interests to seek guidance as soon as possible after the initiation of a criminal investigation or after one has filed formal charges against you.