What is Tax Evasion?

Malcolm Tatum
Malcolm Tatum

Tax evasion is usually understood to be an act in which an individual intentionally chooses to not pay income taxes due. This act of not paying taxes may be conducted by simply chooses to not file an income tax return, or choosing to not include information about taxable income on the filed return. In all instances, this act can be considered to be fraud, and usually carries stiff penalties.

Individuals who evade taxes can be fined or even jailed.
Individuals who evade taxes can be fined or even jailed.

While there are some that consider any type of omission from the tax return to constitute tax evasion, it is important to remember that it is possible to omit an item simply because the data was overlooked when filing the return. Thus, the intent of the individual plays a key role in determining if tax evasion has taken place. When the return fails to include information simply because the filer overlooked the data, there is a good chance that the tax agency will still impose a fine of some sort, but no further action would be taken.

A tax evader intentially chooses not to file and pay income taxes that are due.
A tax evader intentially chooses not to file and pay income taxes that are due.

However, when it can be demonstrated that the individual willfully attempted to hide information about income that was subject to withholding, the tax agency may choose to impose more than a simple interest fine on the amount omitted. The filer may be subject to stiff fines associated with the deliberate failure to file an accurate tax return, or even possibly face prosecution and some time spent in jail for the intentional negligence.

Tax evasion is considered a crime, and is often classified as fraud. All citizens suffer from tax evasion, as the act prevents the government from collecting funds to use for the operation of essential services to the population. When these funds are not collected, services have to be curtailed and thus result in a lower quality of life for all citizens.

Persons who become aware of an error on calculating taxes on reported income or notice that income was inadvertently left off the tax return for a given period should contact the tax agency and make arrangements to file an amended return as soon as possible. This will help to minimize the chances of being suspected of tax evasion, and allow the matter to be settled before interest charges become significant.

Malcolm Tatum
Malcolm Tatum

After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including wiseGEEK, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.

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Discussion Comments


Latte31-I remember that case. I know that people that work in the United States but keep their money in a foreign bank accounts and avoid paying federal income taxes on that money are committing offshore tax evasion.

Likewise if an American is a working abroad they will have to pay federal income taxes to the United States as well.

The IRS offers various penalties but the criterion for the consideration of tax evasion is the intent to defraud the government. Intentionally avoiding paying federal income taxes is classified as fraud and the penalties include incarceration and substantial fines and restitution of back taxes.

The IRS is really not an agency that you want to owe money to. Tax evasion law is pretty specific and often tax evasion lead to jail.


Sneakers41-I remember that case. Snipes used the 861 section of the tax code to state that only foreign earned money was subject to federal income taxes.

This is clearly untrue and it is a misinterpretation of the tax code that is common among tax evaders according to the IRS.

It is really interesting how people feel that they do not have to pay taxes like everyone else.

There was also the Richard Hatch tax evasion case. He was the winner on Survivor’s first season and was awarded the grand prize of $1,000,000.

He felt that he did not have to pay the taxes because he claimed that there was a backend deal with the producers of the show for them to pay his taxes if he would not reveal that producers offered food to the contestants which would ruin the mystique of the show.

However, the producer did not mention this information on the stand during the trial and Richard Hatch was convicted of tax evasion and sentenced to four years in



The Snipes tax evasion case is really incredible. He chose not to file tax returns for five years and then filed fraudulent tax returns for two years.

He then recanted those two tax returns and indicated that he was actually due a tax refund for those two years that he actually filed.

This is what tipped off the IRS that something was not right and the IRS demanded that Wesley Snipes pay the 12 million that he owed in back taxes. He refused to pay this tax and this became a tax evasion investigation that actually led to a tax evasion conviction.

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