Tax Evasion in California

Tax evasion is the “deliberate underpayment or failure to pay taxes”, as described by the Internal Revenue Service. We will go over the types of tax evasion laws and the specific rules for California.

There are two main types of tax evasion: assessment evasion and payment evasion. Assessment evasion is the intentional underreporting of one’s value of their taxes. An example of this could be someone not reporting their income from capital gains, such as stocks. The key to assessment evasion is that there is intent to not report their income, not negligence.

The other type of evasion is payment evasion. This is physically hiding assets/money that should be taxed on. A prime example of this is offshore banking accounts, such as Swiss bank accounts. Again, there must be intent of evading this type of payment as well. Having errors in your taxes won’t result in prison time. These laws are crafted to punish people who willingly go out of their way to not report income and pay taxes.

In California, tax evasion charges result in a four-step process. First, the state tax agency will sue the taxpayer for the amount that is owed. Then there will be a tax lien on any property and the agency will acquire a warrant to acquire the property in which the lien is placed on. Finally, the property will be seized by the marshall or sheriff and will be auctioned to collect funds. This process can be stopped if they promptly pay the taxes that they are owed, along with interest on back taxes. Usually, there will not be jail time.

However, if a false tax return is intentionally filed, then penalties for tax fraud could include jail. For example, if false tax returns have been filed for years and the amount becomes significant enough to pursue jail time, then jail time will be considered.

To avoid all this, please pay your taxes accordingly

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