TAX AVOIDANCE OR TAX EVASION, WHICH ONE CAN SEND YOU TO JAIL?
Tax evasion refers to any intentional method employed to illegally evade paying the tax that you owe. Tax evasion is subject to criminal prosecution.
Here are some examples of tax evasion:
Not filing a Personal Income Tax return when required
Filing a frivolous tax return. [a return with information that is untrue or incomplete]
Not reporting taxable income, such as the income received from being paid “under
the table,”
Claiming fraudulent deductions [which could include deductions for items that don’t exist
or that don’t qualify as deductions under the tax law.]
Claiming personal expenses as business expenses.
What are some of the penalties of tax evasion?
Tax Evasion Penalties:
Failure-to-file penalty. Up to a maximum of 25% of the tax due
Failure-to-pay penalty: Up to a maximum of 25% of the tax due
Tax Penalty for frivolous return: $500 penalty.
Accuracy-related penalty: An accuracy-related penalty of 20% applies to any
underpayment due to: Negligence or disregard of rules or regulations or Substantial
understatement of income tax.
Civil Penalties
Filing late: Up to a maximum of 25% of the tax due.
Fraud: up to a maximum of 75% of the tax due.
Return over 60 days late is the smaller of $100 or 100% of the unpaid tax.
Paying tax late: Up to a maximum of 25% of the tax due.
Combined penalties: If both the failure-to-file penalty and the failure-to-pay
penalty (discussed earlier) apply in any month, the 5% (or 15%) failure-to-file
penalty is reduced by the failure-to-pay penalty. However, if you file your
return more than 60 days after the due date or extended due date, the
minimum penalty is the smaller of $100 or 100% of the unpaid tax.
Accuracy-related penalty: The penalty is equal to 20% of the underpayment.
– You underpay your tax because of either “negligence” or
– You “disregard” the rules or regulations or
– You substantially understate your income tax. .
Fraud: If there is any underpayment of tax on your return due to fraud, a penalty of
75% of the underpayment due to fraud will be added to your tax.
Criminal Penalties
You may be subject to criminal prosecution and need to go to trial for actions such as:
Tax evasion,
Willful failure to file a return or
Supply information or
Pay any tax due or
Fraud and false statements or
Preparing and filing a fraudulent return
Remember to always consult with your tax advisor regarding your income tax needs.
Stacie Clifford is licensed by the California Board of Accountancy.
PART I – IN THE SERIES: HOW SHOULD WOMEN PROMOTE THEMSELVES IN THEIR BUSINESS COMMUNITIES?
Recently I had a series of conversations with a woman who is attempting to promote herself and her business endeavors. During the course of our conversations, it occurred to me that we had very different views (actually apposing views) related to what it means to be a woman in a business community (and more importantly) what constitutes acceptable self promotion practices. As a result of our conversations, I found myself thinking about the different ways business women have promoted themselves over the years. And I came to some interesting conclusions – which I will discus later on in this series.
But for now, if you are thinking about promoting yourself, try asking yourself these question? What type of impression do you want to make on the world? How do you think what you say and how you act influences your chances of achieving your goals? To narrow it even further, think about this: If someone from your target group (the businesses or persons that you are hoping to attract as clients) was asked to describe you using the first thought that came to their mind, what do you think that would be?
If you’re not sure, ask a friend, a family member or a co-worker (who you think will be honest with you). But keep in mind, your friends, family members and co-workers have gotten to know you, so it may be difficult for them to describe you from a first impression standpoint. So ask them to describe you in three words or less and see what they say. You might be surprised. Its such a cliché but so completely true – you only get one chance to make that first impression. Bad promotion i.e. bad first impressions can be career suicide.
© 2007 Stacie Clifford All rights reserved
