The term “tax evasion” is defined as using illegal means to avoid paying taxes. Tax evasion schemes usually involve an individual or a corporation figuring out ways to misrepresent their income to the Internal Revenue Service.

Some of the ways individuals or corporations may use to misrepresent their income to the Internal Revenue Service include under-reporting income, exaggerating deductions, or hiding money, such as depositing it in off-shore accounts. The U.S. Government loses billions of dollars every year because of tax evasion.

Tax evasion in the United States is a crime that is punishable by law. Penalties may include fines, imprisonment or both. Section 7201 of the Internal Revenue Code states that, “Any 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.”

Under this statute and related case law, the prosecution must prove, beyond a reasonable doubt, each of the following three elements:

1) that an unpaid tax liability exists
2) that there was affirmative action (not just an omission or failure to act) in an attempt to evade either the assessment of a tax or the payment of a tax
3) that the defendant possessed the specific intent to evade a known legal duty to pay the tax