Taxes can be incredibly complicated, even for those who are well-versed in financial matters, and they only become more complicated when you consider paying taxes on a small business or estate. Fortunately, there are ways for law-abiding citizens to avoid inadvertently committing tax evasion.
Here are some things to know regarding avoiding tax evasion and its penalties in New York.
Regarding your ability to pay
Generally, not being able to pay your taxes will not land you in prison, provided that you filed your tax return paperwork and did not willingly hide income or assets. In the eyes of the law, it is always better to be upfront, and then negotiate a payment plan or other compromise later. Neglecting to file a return can lead to criminal penalties.
Be careful with who you assist with filing their tax return. Even if you do not receive any financial benefits yourself, it is still possible to go to prison for helping someone else avoid paying what they owe the government. Although this is highly dependent on the situation, the safest bet is to refer friends and relatives to an accountant or other tax specialist.
Submitting a fraudulent return
Willfully and knowingly submitting an incorrect tax return for your personal financial gain is one of the quickest ways to face jail time for tax evasion. Honest mistakes are okay, however, clearly fraudulent forms have consequences.
By being aware of what constitutes tax evasion, tax filers can make better decisions and avoid potential audits and stress.