Tax evasion is the criminal offense of a person or entity using illegal methods to avoid paying the person or entity’s true tax liability. The Internal Revenue Code—a federal statute located in the United States Code—states that “[a]ny person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.” 26 U.S.C. §7201.
Tax evasion is also a criminal offense under state law when a person or en,tity uses illegal methods to avoid paying state income, property, sales, franchise, payroll, and other taxes.
In Texas, tax evasion is considered a serious criminal offense, both under federal and state law. Federally, the Internal Revenue Code (26 U.S.C. §7201) stipulates that willfully attempting to evade or defeat any tax or its payment is a felony. Convicted individuals may face fines up to $100,000 ($500,000 for corporations), imprisonment for up to 5 years, or both, along with the costs of prosecution. While Texas does not have a state income tax, tax evasion can still occur in relation to other state taxes such as property, sales, franchise, and payroll taxes. Engaging in tax evasion at the state level can lead to criminal charges, with penalties that vary depending on the specific tax and the amount involved. An attorney can provide guidance on the consequences of tax evasion and the applicable laws in Texas.
