by 
The Curious Bag
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Tax evasion is the act of illegally avoiding the payment of tax. Although tax evasion can be cloaked in a variety of schemes, its defining characteristic is its goal of circumventing federal law in order to prevent the payment of tax.
Tax Avoidance
Avoiding tax by using the tax code to lower your tax liability is tax avoidance, not tax evasion.
Tax Evasion
Tax evasion is the act of developing or implementing a scheme designed to avoid payment of tax. Tax evasion, unlike tax avoidance, is illegal.
Significance
America employs a pay-as-you-go tax system whereby citizens are expected to pay tax on the money they earn as they earn it. Although taxpayers are allowed to use current tax law as a guide for avoiding tax by taking advantage of credits and deductions, they are not allowed to manipulate the tax code in an effort to avoid taxes.
Considerations
Although ignorance of the law is no excuse, it is also not tax evasion. Common mistakes made on income tax returns do not constitute tax evasion. Tax evasion is a willful attempt to evade the tax you owe.
Warning
According to the IRS, there were 1,038 indictments for tax fraud in 2008. Although it is now clear how many of the prosecutions were for tax evasion, tax evasion is punishable by fine, retribution or prison.
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