Saturday, October 1, 2016

Tax Evasion Question

On my blog yesterday, I got this question:

why do some people go to prison for tax evasion, instead of just garnering their wages / having them pay it back. I am thinking of the actor Wesley Snipes, who said it was the accountant he hired and trusted.

There are several different penalties for tax evasion. If you're fine with reading legalese, here's a partial list from the IRS website. Whenever tax evasion comes up, Criminal Investigation decides what penalty is most appropriate, on a case by case basis.

In general, tax evasion is considered to be "negligence" or "fraud". That is, either it happens by accident, or it happens on purpose. If you wrote a "5" instead of a "6" by mistake, that's negligence. If you deliberately didn't mention your secret business that made $250,000 last year, that's fraud. Fraud carries a much higher penalty than negligence.

The penalty for tax evasion can change, depending on who's responsible: the taxpayer or the preparer (i.e. the person who prepared the tax forms.)

As for Wesley Snipes, he was arrested for not filing any tax returns. For three years, he sent absolutely no tax forms into the IRS. That is a different, less serious crime than filing a bogus tax return, but they both count as tax evasion, because someone isn't paying the correct amount of taxes.

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