There is a big difference between working things around to avoid paying taxes and the evasion of income taxes.
When you avoid paying certain taxes, you use legal means available to you to reduce the quantity of taxes you have to pay. When you evade taxes using illegal means and strategies, it is considered a crime, and prison is in order when you get caught.
Take a look at the cases of five very smart but criminal tax evaders, who got caught.
This case is considered to be the greatest tax evasion on record in the U.S. He was an executive in telecommunications who hid his money using aliases, shell companies, and offshore accounts. He admitted hiding 365 million dollars in income to the court, and he was punished with nine years of prison and a fine of two hundred million dollars in the year of 2006.
Because of a typo mistake in the judgement against Anderson, he did not pay most of the overdue taxes. Three years’ worth of penalties and taxes were relinquished by the IRS because of this mistake. He still owes 23 million dollars to the District of Columbia.
Alphonse Capone was a mafia lord who dedicated himself to all kinds of illegal businesses including but not limited to prostitution, bootlegging, and murder, but none of these could ever be proved. Finally he was sent to jail for nothing more than tax evasion. When Al Capone was the leader of the Chicago Mafia, it is said that the organization received an income of one hundred million dollars per year.
In 1916, the word “lawful” was erased from the 16th Amendment so even money received from illegal activities had to pay taxes. Capone had two options: either he reported his profits to the IRS, thus confessing to all his criminal activities, or he could hide his income and have the possibility of going to jail for evading his taxes. Capone was finally sentenced to 11 years in prison, and he also had to pay his taxes and the fines ordered by the judge.
Joe Francis, the author of “Girls Gone Wild” is our next tax evader. Francis was accused in 2007 of committing felony tax evasion by filing incorrect tax returns for his corporation. He reported 20 million dollars of fake expenses so he would not have to pay taxes on them. The charge was dropped when he pleaded guilty to tax evasion.
The Federal government has accused him of many different tax evasion schemes. He supposedly hid his money in offshore banks so he didn’t pay taxes for years. The Federal government says he owns them somewhere around twelve million dollars in overdue taxes.
Snipes was exonerated of the conspiracy charges and felony tax evasion in 2008, but he was given three years in prison for misdemeanor charges.
Ms. Helmsley was a hotel operator who was known as the “the Queen of Mean.” She once said to her housekeeper that only the small people payed taxes, and that she did not and would not. Since she and Harry, her husband, managed a billion dollar property portfolio, to avoid paying taxes, they added billions of dollars of private expenses to the business they managed.
She was convicted on three of the cases she was accused of and served eighteen months in federal prison in 1989. She was instructed to present herself to federal prison on April 15, 1992 which coincidentally was the last day income taxes could be filed.
It is always good to be imaginative to save money, especially with regards to taxes, but the difference between saving money and tax evasion are perfectly defined. The point of the matter is not if you will get caught, it is when you will get caught.