Tax evasion is different from tax avoidance, which is making use of legal methods to minimize tax due. There are many deductions you can legally claim to reduce your tax liability, for example if you have dependents (the more dependents, the lower your taxes), if you have certain medical expenses or if you contribute to certain retirement plans or to charitable organizations. Taking advantage of them and keeping your tax bill to a minimum is quite legal and if you do that you are guilty of no crime. However, when companies, individuals, or any other legal entities intentionally avoid their legal responsibility, that is tax evasion and the penalties are severe, including prison terms and hefty fines.
The Internal Revenue Service (IRS) oversees the regulation of taxes. It also prosecutes any person or entity that avoids payment of taxes due, and can assess penalties.
The IRS has nearly 3000 special agents who are trained to gather the information used to detect tax evasion. They have access to tax returns, the power to issue a summons for access to further financial information, and the right to seize or freeze monies in the attempt to collect the necessary financial information.
The IRS audits some taxpayers at random each year, but most audits are a result of unusual activity. If a person claims a lot of deductions in proportion to their income, or if a person with a lot of assets declares a very small income, an audit may result. If it is established that taxes have been intentionally evaded, the IRS can levy tax liens, seize assets, freeze money in check and savings accounts, and garnish wages. Any and all properties held by the individual taxpayer can be seized and sold at auction if no attempt is made to repay the liability.
Everyone that is determined to be involved in an evasion of tax liability has the right to meet with the IRS and be heard. Should you find yourself in this situation, it would be wise to engage a tax attorney. There are three crimes with which an individual may be charged:
* Tax evasion: This is a felony and a conviction can carry a prison sentence of up to five years and/or fines up to $100,000.
* Filing a false return: The government does not have to prove the taxpayer intended to evade tax laws, just that the taxpayer filed a false return. This is a felony and can result in a prison sentence of up to three years and/or fines up to $100,000.
* Failing to file a tax return: This is a misdemeanor and can result in a maximum prison sentence of one year and/or fines totaling up to $25,000 for each year for which no return was filed.
Many individual taxpayers rely on accountants and business managers to handle their financial affairs and may not be aware of the status of their finances. However, the individual taxpayer is responsible for the information provided to the IRS. Do yourself a favor and examine your return, understand what you're reading, and check that it is accurate.
Despite this, one in twenty vehicles on the road is still untaxed and undetected. I can be quite sure if I ever tried to get away with car tax, even for a day, they'd find me! To cover this shortfall in revenue, costs of 214 pounds million were put on the law abiding car driver last year.
It has been found through studies that when a car is untaxed continually, the driver is also unlikely to worry whether or not his car is in roadworthy condition. This puts us all at risk, thus pushing up car insurance premiums too, to cover the problems these drivers bring.
The Public Accounts Committee say the whole road tax system is becoming a laughing stock and they don't really have any idea just how huge the problem is. They do know, however, that tax evasion rose to 5% during 2006.
Motorcyclists are pushing their luck even more with between 30 and 38% avoiding the payment. This seems silly when road tax for motorbikes is so minimal. For the small amount they would have to pay in vehicle excise duty, it tops up the road tax and car insurance premiums for the rest of us, putting more pressure on those who are trying to stay within the law.
Funds from the road tax of the 35 million cars on the road raises around 5 pounds billion per year. The aim of the DVLA was to cut car tax evasion by 70 pounds million a year by the end of 2008 but this obviously is not going to happen. These seem like colossal figures and it makes you wonder what we get for our money when you look at the state of some roads.
Maybe they could do a postcode type system like they do with the health authority because I defy anybody to get away with car tax evasion in my area and it seems unfair that we end up paying for those in different areas where car tax evasion is more prolific.
The law abiding drivers are caught out once again when they're number plates are cloned. When the number plate is picked up by a police camera it looks like they have car tax when that particular vehicle doesn't. This puts more dangerous vehicles on the road, causing more accidents and once again pushing up our car insurance premiums.
Essex County Council recently sold a number plate at an auction that had been registered to them since 1904. The number plate reads 'F1' and cost the buyer 375,000. pounds This beats the previous record of most expensive number plate which was set at 331,000 pounds and just said M1. The proceeds from this sale are being put towards a safe driving scheme for young motorists, a very worthwhile cause.
If young motorists are being taught safe driving tactics maybe this will help reduce extortionate car insurance premiums for them so they're poor parents do not have to keep digging deep in our pockets to put the little darlings on our own car insurance.
While car tax is a standard price that we all have to pay, car insurance premiums for young people having just passed their test is exorbitant. With many having to pay over 2000 pounds a year for car insurance, surely it is only the children of the well off that can afford to keep a car on the road? Most young drivers of families with an average income will be put on their parents car insurance policies as an additional driver, bumping up their own premiums although not to the tune of 2000. pounds
Both Rita Preece & Catherine Harvey are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Rita Preece has sinced written about articles on various topics from Home Improvement, Mobile Phone Reviews and Jewelry. The author believes that filing tax returns should be as simple and painless as possible and that every taxpayer should take advantage of the many ways to legally keep taxes to a minimum. Read more at. Rita Preece's top article generates over 4400 views. to your Favourites.
Catherine Harvey has sinced written about articles on various topics from Culture and Society, Home and Wedding Gowns. Insurance expert Catherine Harvey looks at the effects on of car tax evasion. To find out more please visit. Catherine Harvey's top article generates over 1500000 views. to your Favourites.