Tax evasion is the criminal offense of a person or entity using illegal methods to avoid paying the person or entity’s true tax liability. The Internal Revenue Code—a federal statute located in the United States Code—states that “[a]ny person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.” 26 U.S.C. §7201.

Tax evasion is also a criminal offense under state law when a person or en,tity uses illegal methods to avoid paying state income, property, sales, franchise, payroll, and other taxes.

In California, tax evasion is considered a serious criminal offense, both under federal and state law. Federally, as per the Internal Revenue Code (26 U.S.C. §7201), willful attempts to evade or defeat tax can result in felony charges, with penalties including fines up to $100,000 for individuals and $500,000 for corporations, imprisonment for up to 5 years, or both, along with the costs of prosecution. At the state level, California's Revenue and Taxation Code addresses tax evasion related to state income, property, sales, franchise, payroll, and other state taxes. The California Franchise Tax Board is responsible for administering state tax laws and has the authority to investigate and prosecute tax evasion cases. Penalties for state tax evasion can include fines, imprisonment, or both, depending on the severity of the offense and the amount of tax owed.