Legal Definitions - evasion

Evasion, in a legal context, often refers to Tax Evasion.

Tax Evasion is the illegal act of deliberately misrepresenting or concealing financial information to avoid paying taxes owed to a government entity. It involves intentional deceit, fraud, or the willful failure to comply with tax laws to reduce one's tax liability.

Here are some examples illustrating tax evasion:

• Example 1: Undisclosed Income

  A freelance web developer completes several projects for clients who pay in cash. The developer intentionally chooses not to report these cash payments as income on their annual tax return, hoping to avoid paying income tax on those earnings. This act constitutes tax evasion because the developer is deliberately concealing taxable income from the tax authorities.

• Example 2: Falsified Business Expenses

  A small business owner operates a retail store. To reduce the company's taxable profit, the owner creates fake invoices for services never rendered and includes personal expenses, such as a family vacation, as legitimate business deductions on the company's tax filings. This is tax evasion because the owner is fraudulently misrepresenting expenses to lower the business's tax burden.

• Example 3: Illegal Offshore Accounts

  An individual with significant investment income opens a secret bank account in a foreign country known for its strict banking secrecy laws. They transfer a substantial portion of their investment earnings into this offshore account and intentionally fail to declare these foreign assets and the income generated from them to their home country's tax authorities. This deliberate concealment of assets and income to avoid domestic taxation is a form of tax evasion.