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Are your efforts to keep from paying taxes legal?

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Spring is in the air, which means that the deadline for filing your taxes is right around the corner. Just about everyone in the country dreads April 15. That is, unless you will receive a refund. Then, you may look forward to filing your returns if you haven't already.

However, just because you submitted a return, indicating that you receive a refund doesn't necessarily mean you will get one. The IRS will review your return to determine whether the information is correct and whether you actually receive a refund, and if so, how much. What the agency finds could result in accusations of illegal acts. You may be like other Nebraska residents who aren't sure how tax avoidance, tax evasion and tax fraud differ.

This should clear up the confusion

Many people use these three phrases interchangeably, but distinct and important differences exist among the three as follows:

  • Tax avoidance: The legal method of avoiding paying too much in taxes through the use of exemptions, tax credits, tax deferral plans and deductions. If you use the tax code to your advantage and it lowers your tax liability, you did nothing wrong.
  • Tax evasion: History buffs know that famous gangster Al Capone went to jail for tax evasion. This means that he failed to report income, reported illegal expenses or simply didn't pay tax legally owed to the IRS. If the IRS believes you engaged in these activities, you could face criminal charges. 
  • Tax fraud: If the IRS believes you intentionally and illegally defrauded it or attempted to evade tax laws, you could face criminal charges. Any number of alleged actions could cause you to face charges for tax fraud. Proving this offense requires establishing to the court's satisfaction that the taxpayer knowingly cheated the IRS out of legally owed tax payments. 

As you can see, tax avoidance is perfectly legal. Even when you use income tax software, it helps you avoid paying any more taxes than absolutely necessary. However, tax evasion and tax fraud are illegal, and you could face severe penalties if convicted. As is the case with any other white-collar crime, if you face accusations of tax evasion or tax fraud, you may want to consult with an attorney as soon as possible to understand your rights and explore your legal options.

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Monzón, Guerra & Associates, Attorneys at Law
1133 H Street
Lincoln, NE 68508

Phone: 402-477-8188
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