What is the difference between tax evasion and tax avoidance?
One is criminal, and one is not.
To evade paying taxes people have used abusive schemes, transactions and scams to involve tax benefits not allowed by law. The IRS has even provided a complete list of abusive types of tax schemes in Publication 3995. To further complicate matters, they can be of either the simple or complex variety. Nonetheless, they are all illegal.
If it seems to good to be true, it is.
Examples of abusive schemes are ones that promise to reduce your debt or eliminate your taxes via tax credits and/or deductions using a fraudulent return preparer, fake charities, excessive business deductions or reduced business income to receive credits based on income or an illegal tax shelter.
And while double checks for e-filed returns stop claiming children for the benefit of receiving earned income tax or children under 17 credits, they get made on mailed-in returns.
Since 2002, the IRS established a division within the Small Business/Self-Employed Division called the Lead Development Center to assist in the investigation and conviction process of tax evaders.
The IRS has a list it publishes every year of the top tax evasion schemes.
Some of these are:
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