Tax Evasion Vs. Tax Avoidance: The Difference and Why It Matters
Although both sound like something the IRS would frown upon, tax evasion and tax avoidance are very different things. Tax avoidance refers to using legitimate methods to lower your tax liability, while tax evasion is reducing your tax liability through deception and other fraudulent actions.
While some taxpayers knowingly initiate tax evasion tactics on their own, others fall for the promise that a questionable third party can reduce their taxes owed. The IRS often catches these tax scheme promoters and sometimes finds their clients guilty of attempting to evade taxes as well.
Understanding the difference between tax avoidance and tax evasion can help keep you out of trouble with the IRS. Keep reading to learn more about the difference between tax evasion and tax avoidance and how an experienced tax attorney may be able to help clear up misunderstandings with the IRS.