Tax avoidance or tax evasion?

Do you know the difference between tax avoidance and tax evasion? Tax avoidance is taking legitimate actions to reduce your tax bill, such as funding an IRA or appropriately claiming a tax credit. Tax evasion is a deliberate failure to comply with the tax law. It includes actions such as falsifying tax records, inflating expenses and hiding income. Tax evasion can lead to levies, fines, penalties and prosecution. One attorney recently pleaded guilty to evading $857,000 in taxes. The IRS Criminal Investigation unit found that he’d used trust accounts to conceal his income, then withdrawn the funds to pay personal expenses and to gamble. He now faces up to five years in prison without parole.