What does "tax evasion" mean?

The definition of "tax evasion" refers to the illegal act of avoiding the payment of taxes owed to the government. This usually involves deceitful practices such as underreporting income, inflating deductions, or hiding money in offshore accounts. Tax evasion is distinct from legal tax avoidance, where individuals or entities take advantage of allowable deductions and credits to minimize their tax liability within the bounds of the law.

In contrast, legally reducing tax obligations refers to strategies allowed under tax law to minimize taxes owed, which is completely legitimate. Delaying tax payments could involve filing for an extension or postponing due payment but does not necessarily equate to evasion. Incorrectly reporting income could lead to issues like penalties or fines but would not classify as tax evasion unless there is an intent to deceive. Thus, the primary characteristic of tax evasion is that it is an illegal attempt to avoid fulfilling tax responsibilities.