As a tax attorney who focuses on representing taxpayers before the government in both civil and criminal tax matters, it always amazes me how so few practitioners and taxpayers understand what tax evasion is, or the fact that there are two types of tax evasion.

The definition, broadly, of tax evasion is (a) the willful attempt to evade or defeat the assessment of a tax, and (b) the willful attempt to evade or defeat the payment of a tax. But what exactly does that mean… “evade or defeat the payment of a tax”?

There are actually two different types of tax evasion: evasion of tax assessment and evasion of tax payment.

The most common attempt to evade or defeat a tax is the affirmative act of filing a false return that either omits income that should have been reported and/or claims deductions that the taxpayer is not entitled to claim. The tax reported on the return is understated in a willful attempt to cheat the government out of income that it otherwise should have collected.  Consequently, this willful under reporting of income constitutes an attempt to evade or defeat tax by evading the correct assessment of the tax.

The other type of tax evasion is the evasion of payment. This offense generally occurs after the existence of a tax due and owing has been established (either by the taxpayer reporting the amount of tax or by the IRS assessing the amount of tax deemed to be due and owing) and almost always involves some affirmative act of concealment of money or assets by the taxpayer from which the tax could be paid.  For instance, a taxpayer that deals only in cash and structures his deposits so that the bank does not file a currency transaction report would be an example of an affirmative act of concealment to evade the collection of tax.

We will expand on both of these concepts in later blog entries, but if you have any questions regarding tax evasion in Connecticut, New York or elsewhere, or have questions about any other federal tax issue please feel free to contact me at (203) 285-8545 or egreen@gs-lawfirm.com.

Eric L. Green