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Categories: General Tax Terms

Tax Evasion refers to the illegal act of not paying taxes owed to the government by underreporting income, inflating deductions, or hiding money in offshore accounts.

Tax evasion involves deliberately misrepresenting financial information to reduce tax liability and can result in severe penalties, including fines and imprisonment. For example, an individual who fails to report cash income from freelance work is engaging in tax evasion.

It is important to differentiate tax evasion from tax avoidance, which is the legal use of strategies to minimize tax liabilities.

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