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tax evasion

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 Texas, tax evasion is considered a serious criminal offense, both under federal and state law. Federally, the Internal Revenue Code (26 U.S.C. §7201) stipulates that willfully attempting to evade or defeat any tax or its payment is a felony. Convicted individuals may face fines up to $100,000 ($500,000 for corporations), imprisonment for up to 5 years, or both, along with the costs of prosecution. While Texas does not have a state income tax, tax evasion can still occur in relation to other state taxes such as property, sales, franchise, and payroll taxes. Engaging in tax evasion at the state level can lead to criminal charges, with penalties that vary depending on the specific tax and the amount involved. An attorney can provide guidance on the consequences of tax evasion and the applicable laws in Texas.


Texas Statutes & Rules

Federal Statutes & Rules

26 U.S.C. § 7201 - Attempt to evade or defeat tax
This statute is directly relevant to the topic as it defines the federal offense of tax evasion and prescribes the penalties for committing this crime.

Under 26 U.S.C. § 7201, it is a felony for any person to willfully attempt to evade or defeat any tax imposed by the Internal Revenue Code or the payment thereof. The term 'willfully' implies a voluntary, intentional violation of a known legal duty. The statute covers all types of taxes, including income, employment, estate, and excise taxes. Penalties for violating this statute include a fine of up to $100,000 for individuals or $500,000 for corporations, imprisonment for up to 5 years, or both, along with the costs of prosecution. The government must prove an affirmative act constituting an evasion or attempted evasion of the tax, such as filing a false return, failing to file a return, or concealing assets. The statute is a key provision in the enforcement of federal tax laws and is used by the Internal Revenue Service (IRS) and the Department of Justice to prosecute tax evasion cases.

26 U.S.C. § 7206 - Fraud and false statements
This statute is relevant as it addresses the criminal offense of making false statements on tax returns, which is often associated with tax evasion schemes.

26 U.S.C. § 7206 criminalizes the act of willfully making and subscribing to any return, statement, or other document that the signer does not believe to be true and correct as to every material matter. This includes the act of assisting or advising in the preparation or presentation of such a document that is fraudulent or false. The penalties for violating this statute can include a fine of up to $100,000 for individuals or $500,000 for corporations, imprisonment for up to 3 years, or both, along with the costs of prosecution. This statute is often used in conjunction with § 7201 to prosecute individuals and entities that submit false information to the IRS with the intent to evade taxes.

26 U.S.C. § 7203 - Willful failure to file return, supply information, or pay tax
This statute is relevant as it pertains to the willful failure to file tax returns, supply information, or pay taxes, which can be a component of tax evasion.

26 U.S.C. § 7203 targets individuals and entities that willfully fail to file a required tax return, pay taxes due, or provide necessary information to the IRS. The term 'willfully' here also refers to a voluntary and intentional violation of a known legal duty. The penalties for this offense include a fine of up to $25,000 for individuals or $100,000 for corporations, imprisonment for up to 1 year, or both, in addition to the costs of prosecution. This statute is particularly relevant for cases where the failure to act (e.g., not filing a return) is used as a means to evade the assessment or payment of taxes.

26 U.S.C. § 7212 - Attempts to interfere with administration of Internal Revenue laws
This statute is relevant as it covers actions that obstruct or impede the administration of tax laws, which can be related to tax evasion activities.

26 U.S.C. § 7212 makes it illegal to corruptly or by force obstruct or impede, or endeavor to obstruct or impede, the due administration of the Internal Revenue Code. This includes acts such as intimidating or impeding IRS agents, or destroying or concealing records. The penalties for violating this statute can include a fine, imprisonment for up to 3 years, or both. This statute is often invoked in cases where individuals or entities take active steps to prevent the IRS from discovering or collecting taxes owed, which can be part of a broader tax evasion strategy.