Posts Tagged ‘Tax evasion’

Civil and Criminal Tax Evasion

March 27, 2014

Jail and money

The difference between tax avoidance and tax evasion?  About 5-10 years in jail.

However, there is a big difference between civil and criminal tax evasion

Civil tax evasion adds penalties to the tax that you owe.

Criminal tax evasion means jail time plus penalties and restitution.

So the difference is money or time or both.  Not worth the risk.

The IRS has a job to do just like you and me. That job is to enforce the laws that Congress enacted.

So, be as aggressive as you are comfortable with.  Hire a tax professional.

But remember that pigs get fat and hogs get slaughtered.

So They Paid You In Cash

October 10, 2013

Pay in CashSo your customer paid you in cash.  For some businesses that is a time to celebrate because they feel that they don’t have to report cash.  Notice we said “feel” and not “THINK”.  Let’s look at the bigger picture here and really THINK this through.

Section 61 of the Internal Revenue Code (yawn) clearly states that “… gross income means all income from whatever source derived”.  That is the law.  If it comes through your business, chances are it is gross income and should be reported.

Well, you say, I like to push the limits.  I drive over the speed limit, but not a lot.  A few bucks never hurt anyone.  That is what you tell yourself.  Rational Lies.

Consider this.  If your internal controls (or lack of them) are so loose that it is easy for you to take out cash without running it through your books, then perhaps your employees feel that they can do the same.  I mean, if you skim cash from the business then it must be OK for them to do it.  Is that really OK with you. I seriously doubt it.

Then let’s go to the extreme.  You get comfortable not reporting income and  the numbers start getting bigger and bigger.  Then the IRS comes in and they decide that they are going to make an example out of your case and prosecute you criminally for income tax evasion.  First, you will incur lots of attorney and accountants fees because, as the old adage goes, “the lawyer that represents himself has a fool for a client”.

Then you will probably go in front of a jury of your peers.  Now most of these “peers” on the jury are probably  W-2 employees and not in a position to omit any income from their tax return. They will NOT understand nor appreciate that you are trying to get away with it.  They can’t so why should you.  Guilty.

There is nothing wrong in being aggressive with your taxes.  But ask yourself, is it really worth the risk.  If you are going to take a risk, at least look at the downsides.

And also remember – Pigs get fat.  Hogs get slaughtered.


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