Business Tax Evasion

Business tax evasion is the intentional and illegal avoidance of paying mandatory State and Federal taxes to the respective governmental authority.  Ignorance of State or Federal business tax laws or incorrect interpretation of them functions to negate the necessary “mens rea” or guilty mind required to be charged with the crime of tax evasion.   A business owner or employee’s intent to avoid paying known taxes must be proven in order to charge that individual or business with criminal tax evasion.

Business tax evasion usually involves the intentional misstatement of business income and/or expenses. This can happen in several different ways.  Fraudulent reporting of false business expense deductions is a common evasion plan.  Another scheme that works particularly well is engaging in fictional alterations, additions and subtractions, to the employee payroll books.

Evading Business Taxes

An employer might evade properly reporting business related taxes by:

• Keeping employee income tax withholdings for themselves
• Pay employees in cash or “under the table” and report no earnings for that employee
• File patently false payroll tax returns
• Lease an employee out to a second company and then use that transaction to hide that employee’s income or to exaggerate employee or business expenses.

Retail Business Tax Evasion:

A retail store or similar business might evade reporting taxes by:

• Avoiding the collection of tax.
• Collecting the sales tax reimbursement from customers but failing to then report those funds to the State while simply keeping those taxation funds.
• Making business sale transactions in cash and then failing to report those sales as taxable transactions.
• Arranging with certain customers to fake an out-of-state sale so that the customer gets a better price on the product while ultimately neither customer nor business pays the State sales tax on the transaction.
• Purchasing illegally procured petroleum products, tobacco products and other specially taxed products (e.g. buying cigarettes without tax stamps or buying unregulated gasoline) and then selling them tax free.
• Avoiding special State and Federal importation taxes by selling imported products as domestic products.

Business Tax Evasion Help

It is important to obtain legal help if you are an employee of a business which you believe may be intentionally evading reporting business taxes especially if it is adversely affecting your employee payroll tax withholdings or posing similar financial loss to you on a personal basis. A tax evasion attorney will be able to provide you with legal assistance and advice on how to best handle the problem without losing your job or getting a negative reference from that employer should you leave that position.  A good tax attorney can usually be accessed by a simple internet search and can be a valuable tool in understanding your rights and responsibilities should you encounter, or become unintentionally enmeshed in, a business tax evasion scheme.