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Tax evasion can be defined as the use of illegal means to avoid paying taxes. These methods usually include deception or misrepresentation of the income of an individual or company in the Internal Revenue Service. Tax evasion may take the form of misleading by not reporting real income or inflating deductions and completely concealing money and its benefits in external accounts.
Criminal charges and heavy penalties may be brought against the individuals involved in these illegal projects, after making sure that the failure to pay the tax was deliberate and for reasons aimed at evading the imposed laws. In certain cases money laundering charges may be brought against the people who claim that these funds are from Legal sources and no taxes can be calculated on them
There are many methods that some individuals use illegally for the purpose of evading paying taxes, and some of these methods as following:
Tax avoidance is defined as the use of legally legitimate methods by individuals or institutions with the aim of reducing the size of the amounts claimed for tax, as companies avoid taxes by taking all legitimate exemptions and deductions to protect their income from tax.
The most important difference between tax evasion and tax avoidance may be that one of them is legitimate while the other is punishable by law and may lead to imprisonment. An example of tax avoidance methods is for the organization to set up a tax deferral plan or obtain tax credits to spend money on legitimate purposes, such as obtaining a tax credit to give your employees paid family vacations.
