evasion of tax

Tax evasion is the failure to pay or the deliberate underpayment of taxes. Anyone found guilty of tax evasion faces hefty fines, prison time, or both. 

Two Types of Tax Evasion

 evasion of assessment and evasion of payment.

If a person transfers assets to prevent the tax authority from determining their true tax liability, they have attempted to evade assessment. If a person hides their assets after a tax becomes due and owing, an attempt to evade payment has occurred.

Evasion of Assessment

The taxpayer must perform some action that is focused on defeating the assessment of a tax. Requires more than a proof of negligence. An intentional under-reporting qualifies as an attempt to evade.

Evasion of Payment

Affirmative acts to evade payment generally involve concealment of money or assets with which the tax could be paid. Such an act could also take the form of removing the assets from the reach of the tax authority, such as in a foreign bank account. Simply failing to pay taxes owed, is not evasion of payment. An example of evasion of payment is concealing assets in a family member’s bank account.

For  beter understanding the concept refer: tax-evasion