The Thin Line Between “Tax Evasion” and “Tax Avoidance”
  • March 14, 2016
  • admin
  • 0

Tax evasion costs the US government billions of dollars in losses every year, which explains why they are one of the biggest concerns of the IRS. There are companies with international subsidiaries in tax haven jurisdictions, established with the sole purpose of evading taxes. A recent study conducted by the University of California, at Berkeley reveals that the total overseas holding of US based companies is approximately $7 trillion – a sum that’s equivalent to the collective value of global gold reserves.

The Thin Line Between “Evasion” and “Avoidance”

What many people don’t know is that tax avoidance (nonpayment after filing) is legal, and taxpayers may leverage the option to reduce their tax liabilities. Tax evasion (non disclosure), on the other hand, is a punishable offense by US law. Surprisingly, despite knowing the possible consequences, many people who choose to walk the line and find themselves on the wrong side of the law.

U.S. vs McBride: A Case that Made Headlines

Jon Y. McBride, a resident of Kaysville, Utah, in 2012, was prosecuted in what can be termed as one of the most prominent tax evasion battles in US history. Jon was convicted for being involved in a “complex tax evasion scheme”, for which he had opened offshore accounts with the Merrill Scott Firm.   McBride didn’t  disclose any of the offshore assets in his 2005 tax filing.

Before the lawsuit entered the court, the IRS sent a number of warnings regarding Jon’s FBAR non-filing, which included the promotional materials regarding his tax evasion scheme and a newspaper article sent by his accountant.

Here’s an excerpt from the verdict:

“McBride also willfully attempted to evade his federal income taxes for the 2006, 2007, and 2009 tax years by failing to file an individual federal income tax return, filing a false tax return where he underreported his income by more than $300,000, and filing a false tax return that reported zero income.”

The Court held Jon guilty of intentional tax evasion and lying to the IRS during the investigation, imposing a sentence of 27 months in prison.

The Right Way Forward

Contrary to popular belief, the IRS promotes tax savings and has provisioned numerous avenues through which taxpayers can reduce their taxable income, and therefore, subsequent taxes. Taxpayers can reduce their tax burden through deductions such as real estate taxes, student loan interest, mortgage interest and retirement contributions. Therefore, rather than trying to fool the system, which is almost certain to backfire, people can take advantage of the legitimate tax saving options. Remember, tax evasion is a criminal offense, punishable by jail time.

If you or someone you know has been avoiding filing taxes, let Nick help you find the way to a solution.  Call us at (972) 426-2553 to schedule a complimentary consultation.

Please follow and like us:

What Our Clients Have to Say

Susan WilsonSusan Wilson
03:27 25 Jan 23
I have been very pleased with the solid counsel and guidance that Nick Nemeth has provided me regarding my tax issue. I found him to be honest and straightforward which I appreciated. I was impressed with his relevant experience and knowledge . He has definitely brought me peace of mind during a difficult and stressful time.
Sarah HowardSarah Howard
03:44 14 Nov 22
I would like to thank Mr. Nick and his staff for the superb help that I received from them. My IRS problem was resolved quickly and efficiently. It took 2 visits to convince me that I was over my head. I thought that I could call the IRS, appeal my tax notices and settle on a payment plan on my own. After many phone calls to the IRS, waiting sometimes more than 4 hours with no resolution to speak of, it proved to be extremely difficult and stressful. Revisiting Mr. Nick was a huge wake up call. My account was reviewed, and a payment plan was established with the IRS within a week. I will be forever grateful to the staff who worked on my case and especially to Lorna who listened to me vent while going through this painful process.
M WM W
00:33 07 Aug 22
I cannot say enough good things about Nick and his team. When I first met with Nick he was up front, honest, friendly and efficient. When I worked with one of his attorneys, Eric B, I was just as pleased. All of the staff there are nice and very helpful. I wish I hadn't waited so long to get help with my issue. Over 6yrs I tried getting through and getting anywhere with the IRS and hardly made any progress. I know this may not be the case for all, and even I thought it would take longer than it did, but 3mos and they had my situation straightened out. I still can't believe it. Thank you thank you THANK YOU for all that you did for me. This is a huge burden gone out of my life now thanks to you. If anyone needs help out there, I know you may not want to shell out more money to get their help but it may just save you in the long run.
Spoilly GirlSpoilly Girl
23:49 03 Aug 22
The Nemeth Law team is exceptional. They treat their clients like a family member who is in crisis. They want you to get the best possible outcome. I really appreciate everything that they did for me. Jake and Ashley had the greatest role in my case and it all turned out for the best for me. Thank you Nick and team for easing my fears and getting me through the long process. I'm truly grateful.
Eddie WaltEddie Walt
19:44 12 Jul 22
During a time in which competent, professional service at a fair price seems to have disappeared, Mr. Nemeth and his team are a refreshing breath of fresh air.From my first phone call to the final settlement of our case with a non-responsive IRS, they under-promised, over-delivered and were in constant courteous contact to make sure we knew exactly what was happening and where we stood.I hope to never need their services again, but, should I receive another friendly letter from the IRS...I know who to call!
js_loader
Quick Inquiry

    captcha

    Enter the text you see above