New York residents may not know that tax avoidance is legal and tax evasion is illegal. Whether you pay taxes as an individual or a business owner, the Internal Revenue Code permits you to avoid paying some taxes by following specific practices. For instance, the tax code allows companies deductions to mitigate the cost of operating a business. You as an individual are also permitted to set up 401(k) plans for employees so that you can delay paying taxes until a future date.
Tax avoidance loopholes exist to help lower your taxes
Although IRS rules are complex and easily misinterpreted, it is legal to avoid paying taxes. However, you must understand the relevant laws to benefit from loopholes without experiencing legal ramifications, including the need for a strong criminal defense strategy.
Tax evasion is a felony punishable by law
You are guilty of breaking the law if you withhold information about your income from the IRS. Reporting less income than you earn to evade paying taxes is a crime punishable by law. Furthermore, it is illegal to hide money in offshore banks. Tax evasion does not follow any legal loopholes in the tax code. Instead, tax evaders lie about income to evade their financial obligations to the IRS.
Tax evasion and tax fraud are both crimes
You may not like to admit that you have committed fraud by practicing tax evasion. Evading your duty to pay taxes is a felony accompanied by hefty fines and possible imprisonment.
Take advantage of legal avoidance loopholes
Playing by the tax code rules is the best policy. You can benefit from legal tax avoidance loopholes while avoiding evasion. Truthfully paying taxes may not only keep you out of jail. You may also sleep better at night.