Comment on this discussion post below and explain why you agree with it$.$ Tax avoidance is the legal method by which individuals or organizations mitigate their tax liabilities. Tax evasion is the illegal methods of hiding one$$s financial status and tax liabilities from the government.$($ACFCS$,2014,$ p$.113)$ It is important to understand the difference for various reasons depending on your status.$$ As an individual who must pay taxes, it is important to understand the difference so that you can legally mitigate how much money the government takes from you while not crossing the line into illegality that will get you in trouble.$$

As a financial investigator in the civilian world, you may also be called upon by clients for advice on tax avoidance.$$ It is important to be able to advise them on what proper tax avoidance is and what crosses the line into tax evasion.$$ In a consulting role, you may also be asked what technically crosses the line but appears to lack intent or willingness.$$ Willingness was a key component of Cheek v$.$ United States.$$ Cheek argued that his tax evasion was not willing because he argued that he was under the mistaken belief that he was within his legal right not to file tax returns.$($Townsend$,2015,$ p$.$ Chapter $2)$ Some clients are willing to skirt the law if they believe there is enough potential for return on investment and that the risk is low enough not only in probability but also in consequence.$$ Suppose they think they could successfully argue in court that their malfeasance was a simple accounting error or based on an improper understanding of the law and potentially only receive a small fine. In that case, they might desire to engage in such activities.$$

Understanding the difference between tax avoidance and tax evasion is especially crucial for those who work in taxes, whether civil auditors or criminal tax investigators such as the state Departments of Revenue Criminal Tax Investigators or the IRS Criminal Investigations special agents. $$Due to the IRS$$ Tweel Rule, the IRS$$ criminal investigators cannot comingle an investigation with a tax audit within their civil division.$$ Because of this, the IRS has to ensure that its civil auditors are well$-$trained in recognizing tax evasion.$$ The agency even designated some of these civil auditors as Fraud Technical Advisors and gave them increased training in recognizing tax evasion.$($Townsend$,2015,$ p$.$ Chapter $8)$

Several red flags can signify tax evasion.$$ When an individual or a corporation underreports their income and appears to be $$living above their means,$$ purchasing items that their tax returns would indicate they could not afford is a signal of tax evasion.$$ Reporting too many deductions is another red flag, if the amount of deductions reported by the individual or entity far exceeds the normal amount of deductions a person of a similar background or an organization of the same type or size would report.$$ Another red flag is when an individual or entity$$s claimed assets being used as a deduction are obviously overvalued.$($ACFCS$,2014,$ p$.110)$

There is not truly a tax issue with all financial crimes.$$ Not all countries have income taxes, such as the Bahamas, Bermuda, Monaco, and the United Arab Emirates.$($Maverick$,2024)$ Here in the United States, not even all states have income taxes.$$ Moreover, money amounting to less than $$600$ from a single source need not be reported to the IRS.$$ Additionally, the IRS establishes a list of minimum income tax filing requirements, with the minimum gross income being $$12,950.($IRS$,2023)$ Not only that but showing how much the government cares more about getting its money than pretty much anything else, the IRS provides a place, Form $1040,$ Line $8$z$,$ Schedule C$,$ where you can declare your illegal proceeds and count it simply as $$other income.$($Bink & Fox, $2024)$

On September $26,2024,$ Dwayne Lorenzo Richardson was convicted of tax evasion.$$ Richardson only claimed he owed $$28,496$ despite making over $$1\mathrm{.}2$ million as a software engineer for $2017$ through $2019.$ Richardson claimed $$1\mathrm{.}1$ million in medical expenses when, in fact, he only paid a few hundred dollars for an appendectomy.$($IRS$,2024)$ The red flags were the massive medical claims, and all were related to an appendectomy.$$ It would have been easy for any IRS or state tax reviewer to realize that an appendectomy does not cost $$1\mathrm{.}1$ million.$$ Worse, Richardson claimed it for three years.$$ You can only get your appendix removed once.$$ I would send a Civil Investigative Demand to the hospital to collect the billing records.$$ That would immediately prove that the $$1\mathrm{.}1$ million claims were false.