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 South Dakota, 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), willfully attempting to evade or defeat any tax is a felony, punishable by a fine of 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. While South Dakota does not have a state income tax, tax evasion can still occur in relation to other state taxes such as property, sales, and franchise taxes. Engaging in activities to illegally avoid these taxes would be subject to state criminal statutes, which may include penalties such as fines, imprisonment, or both, depending on the severity of the offense and the specific provisions of South Dakota state law.