A tax evasion charge is no light matter. A conviction of an IRC 7201 offense, the statute that defines attempted tax evasion, results in a felony, $100,000 fine, and up to five (5) years in prison. If you have committed tax evasion and the government has not yet discovered it, there are protective measure you should consider with your attorney.
It is important to note that tax evasion is a very different sort of thing from tax avoidance. Tax avoidance involves the careful, legal structuring of one’s affairs so his tax liability is reduced. Tax avoidance is legal. As one famous judge put it, “[o]ne may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.” Helvering v. Gregory, 69 F.2d 809, 810-11 (2d Cir. 1934). Tax evasion, by contrast, is not legal and it involves the willful attempt to avoid paying one’s tax liability after it has been incurred. The distinction is sometimes subtle, but your tax attorney knows the difference.
