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Tax evasion in the United States information


Front page of The Toledo News-Bee, April 24, 1916

Under the federal law of the United States of America, tax evasion or tax fraud is the purposeful illegal attempt of a taxpayer to evade assessment or payment of a tax imposed by Federal law. Conviction of tax evasion may result in fines and imprisonment.[1] Compared to other countries, Americans are more likely to pay their taxes on time and law-abidingly.[2]

Tax evasion is separate from tax avoidance, which is the legal utilization of the tax regime to one's advantage to reduce the amount of tax that is payable by means that are within the law. For example, a person can legally avoid some taxes by refusing to earn more taxable income or buying fewer things subject to sales taxes. Tax evasion is illegal, while tax avoidance is legal.

In Gregory v. Helvering the US Supreme Court concurred with Judge Learned Hand's statement that: "Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes." However, the court also ruled there was a duty not to illegally distort the tax code so as to evade paying one's legally required tax burden.[3]

  1. ^ 26 U.S.C. § 7201.
  2. ^ Chun, Rene (2019-03-10). "Why Americans Don't Cheat on Their Taxes". The Atlantic. Retrieved 2020-02-27.
  3. ^ Helvering v. Gregory, 69 F.2d 809, 810 (2d Cir. 1934), aff'd, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935).

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