Many taxpayers dread tax season since they either despise the preparation process or the tax bill they owe. Though some people accept the responsibilities that come with filing and paying taxes, others resort to illegal means to shirk their tax duties, aka tax evasion.
If a Texas business owner commits tax evasion or fraud, they will be charged with a Class C misdemeanor if less than $50 and a first-degree felony if more than $200,000. In addition, they may face jail time and lose their sales tax permits. Below are four common examples of tax evasion.
Hiding income/assets overseas
Some taxpayers attempt to evade tax responsibilities by not mentioning overseas rental properties or foreign accounts. They assume they don’t need to report them to the IRS since the assets or funds are outside the United States.
Paying employees under the table
Suppose an individual employs a cook or gardener who does work for them a few times a week. The employer might opt to pay them under the table to avoid creating W-2 forms.
Purposely omitting or underreporting income
A person might deliberately underreport or omit additional income. Taxpayers should report all income, even income deriving from criminal activity.
Attempting to claim personal expenses as business expenses
If someone uses an object for both personal and business reasons, they cannot report it as a business expense. For example, if they run an online business but play games and surf the Internet during off-hours on the same laptop, said laptop does not count as a business expense.
While some people deliberately use underhanded means to evade taxes, others might commit such actions due to ignorance or honest mistakes. If you currently have a tax evasion charge, consider reaching out to legal assistance to aid you in your case.