It is about that time again: Tax Season! Taxation is a complicated venture. There is a reason we hire professionals to complete our taxes. There are so many codes and variations on how to complete taxes, particularly if you are someone with multiple assets. The over-complicated nature of taxes can have people scratching their heads on whether to include or exclude sources of income. You may plug some numbers in and hope for the best. Our white collar crime attorneys in Los Angeles at Okabe & Haushalter understand the tax system’s complexities and what ultimately may resort to tax evasion.
Unless you like reading about taxes, most people pay someone else to deal with their receipts. Most people don’t understand that there is a difference between tax avoidance and tax evasion. They sound similar but are quite different.
According to the IRS, tax avoidance is an “action taken to lessen tax liability and maximize after-tax income.” The IRS allows taxpayers to file deductions, credits, and adjustments to income. Most people get overly taxed during the year. A way to prevent that from happening is to record deductions like mortgages or credits like dependents. People who use deductions and credits are evading taxes. They are trying to prevent themselves from paying more than they have to. This is perfectly legal.
Although evasion sounds like avoidance, they are two different things. Tax evasion is illegal. The IRS defines tax evasion as “the failure to pay or a deliberate underpayment of taxes.” People evade taxes by failing to report all or some of their income. It is different from avoidance because there is no recording of income earned on jobs like pet sitting or gambling habits. Just because you receive cash for your actions does not mean you do not have to record it on your taxes.
In this day and age, everything is digital. Rarely do we use cash; however, just because you receive cash does not mean it can’t be tracked. By failing to report the cash you earn through legal or illegal activity, you are part of the “underground economy,” which is a fun way of saying that you are avoiding paying taxes. In the US, about 1 in every 6 dollars is owed in unpaid federal taxes.
Allegations of tax evasion are very serious. If allegations are proven true, one can face jail time and hefty fines. This could mean trouble for you and those who depend on you. You need skilled defense attorneys to help you navigate this sticky territory. Our award-winning team at Okabe & Haushalter in Los Angeles is here to assist you and calm your nerves. With a free consultation, we can assess your situation and provide the best advice for you. You can contact us for a free consultation of your case today by clicking here or calling 310-430-7799.