Tax Evasion vs. Tax Avoidance: What’s the Difference?

While both tax evasion and tax avoidance may initially sound synonymous, they are actually two completely different things. Tax avoidance is a legitimate method of lowering your taxes, while tax evasion is the use of deception and other forms of fraudulent activities to illegally lower your taxes. One activity is heavily illegal and punishable by the Internal Revenue Service (IRS), and one is not. 

Knowing the difference between tax evasion and tax avoidance can help keep you out of trouble with the IRS and even help avoid the risk of criminal penalties. If you have unknowingly committed tax evasion or have been tasked with proving you did not commit fraud willfully, it is best to reach out to a distinguished defense attorney today. With decades of experience, Bernal Law is here to help you protect your rights and your future. 

Understanding Tax Evasion

When you intentionally attempt to or do not pay your taxes, you are committing tax evasion. Not paying the full amount of your taxes or trying to evade taxes on certain forms of income is also considered evasion. Tax evasion is very serious, illegal, and can result in penalties of mandatory jail time and fees of up to $20,000 in California. Some of the most common examples of tax evasion include under-reporting taxable income and claiming deductions for which you are not legally legible. 

It’s possible to commit tax evasion without doing so willfully or knowingly. In cases like this, it is pertinent to remedy the situation as quickly as you possibly can. This can be done by filing amends for years you mistakenly did not pay the full amount. If you have already corrected the problem, it is not as likely the IRS will pursue you with hefty penalties. If you are currently being accused of tax evasion for reasons you were not actively aware of, it is recommended you reach out to a knowledgeable attorney as soon as possible. 

Understanding Tax Avoidance

On the other hand, tax avoidance is a completely legal method of reducing your tax liability. There is nothing wrong with finding ways to legitimately minimize your taxes or hiring a professional to review your options for you. 

Common examples of legitimate tax avoidance include claim deductions and tax credits. These are specifically designed to help your overall taxable income and your tax bill. However, it is important to note that you can be found guilty by association if your professional tax preparer has used illegal methods of tax avoidance and therefore, committed fraud. 

Incorrectly Accused of Tax Evasion? A Dedicated Criminal Defense Attorney Can Help Today

If you find yourself at the receiving end of tax fraud charges, the best course of action to take is to hire a dedicated attorney immediately. Pedro Bernal, Esq. of Bernal Law has extensive experience in the world of criminal defense, as he served as a Deputy District Attorney in the San Diego District Attorney’s Office for several years. Our firm understands the inherently overwhelming nature of facing criminal charges, especially those which you unwittingly committed. Our people-first approach means you have a dedicated professional by your side every step of the process to help ease any stress and address any questions you may have. 

Trust that you are in good hands by partnering with someone who knows how the other side thinks and what strategies they are likely to use. For a free consultation today in either English or Spanish, use our contact form or call our office at (619) 736-9092

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