Taxes are complicated to address. Of course, most New York residents and those across the country want to do what they can to minimize the amount of taxes they owe. However, it is important to remember that certain measures to reduce taxes, like tax avoidance, are legal, and some actions, like tax evasion, are not.
Avoiding taxes and evading taxes may seem like the same thing, and some people do use the terms “tax avoidance” and “tax evasion” interchangeably. However, if a person is trying to avoid certain taxes, he or she is typically using legitimate methods to reduce the tax amount owed. This could happen by taking deductions or utilizing available tax credits. It is also possible to set up tax-deferred accounts, like certain retirement accounts, that allow parties to pay the taxes on those funds at a later time.
When it comes to tax evasion, however, it is a different matter. Usually, tax evasion means that individuals have taken illegal measures to reduce the amount of taxes they owe. These actions could include hiding assets or not reporting income. It could also involve taking illegitimate deductions or inflating the amount of those deductions. If the IRS suspects a person of tax evasion, criminal charges could result.
It can certainly be unsettling to stand accused of tax evasion, especially if New York residents believed they were participating in legitimate tax avoidance actions. Of course, it is important to remember that the IRS does make mistakes, and accusations of evasion may not always apply to a particular case. If individuals do face this type of accusation, they may want to contact experienced tax law attorneys for assistance in handling the matter.