No one likes paying their taxes, but it’s a fact of life. We know that taxes are necessary to fund important things like roads, schools, the military, and other essential needs. Some people, however, choose to ignore this necessity and avoid paying what they owe or paying taxes altogether. While it is difficult to know the exact amount tax evasion costs the United States, some estimates put it as high as $500 billion. If this is accurate, it would mean almost 20% of income in the United States is not properly reported.

Tax evasion takes a variety of forms and is done at just about every economic level. For instance, someone in the service industry or a laborer might get paid predominantly (or entirely) in cash, leading to them underreporting their income or not filing taxes at all. At the other end of the spectrum, there may be an affluent businessman who may be underreporting income held in an offshore account. All of this adds up to hundreds of billions of dollars for the federal government.

It is important to note that this does not include tax avoidance, which is entirely legal. Tax avoidance simply seeks to minimize the obligation a tax payer has to the government. For instance, someone taking advantage of a traditional IRA to lower their income tax rate would be engaged in tax avoidance, as would business owners deducting certain operating expenses. These examples are just a few of the ways a person can minimize their tax bill while remaining within the confines of the law.

It is extremely important to avoid tax evasion schemes because not only can a person face back taxes and penalties, they could also face potential jail time if the fraud is especially egregious. At Doumar Martin, PLLC, we can ensure that your business is legally avoiding taxes while staying on the right side of the law. We have helped many small businesses get the legal help they need. For a consultation to discuss your matter, contact us right away.