Tax Evasion

## Tax Evasion

Tax evasion is the intentional and illegal failure to pay taxes owed. It is a criminal offense in virtually every jurisdiction.

### Forms of Evasion

- Underreporting income (cash economy, unreported foreign accounts).
- Overstating deductions or expenses.
- Hiding money in offshore accounts.
- Using fake invoices or receipts.
- Failing to file tax returns.
- Identity fraud (filing false returns for refunds).

### Penalties

| Country | Criminal Penalty | Financial Penalty |
|---------|-----------------|-------------------|
| US | Up to 5 years + $250K fine | 75% fraud penalty |
| UK | Up to 7 years | Unlimited fine |
| Germany | Up to 10 years | Back taxes + interest + fine |

### Tax Avoidance vs. Evasion

**Avoidance**: Legal minimization using permitted deductions and structures.
**Evasion**: Illegal concealment or misrepresentation of taxable income or assets. The distinction is intent and legality.