New tax reforms and their impacts on Tax evasion and tax avoidance Essay: The research was conducted to determine the extent to which the tax policy reforms had contributed on the issue of tax evasion and tax avoidance in our economy, and also how tax evasion and avoidance had contributed negatively on revenue generation in Nigeria.
This paper focuses on comparing the concepts of tax avoidance and tax evasion based on Gregory v. Helvering case as well as other cases that mention this case.
In this case, the paper will include a discussion of tax avoidance and tax evasion based on cases citing Gregory v. The use of these cases in the discussion is for the purpose of enhancing understanding of tax avoidance and tax evasion and how an individual can avoid evading taxes.
This paper will also discuss whether tax liability minimization falls under either tax avoidance or tax evasion. However, taxation remains to be a highly controversial and divisive issue among many people. As a result, some people attempt to avoid or evade taxes including through failure to report some of their money-making activities, which is considered illegal and a violation of the law.
The tendency by some individuals to evade taxes is also attributable to the principle of voluntary compliance, which is the basis of the income tax system.
Through this principle, the government requires and expects all individual citizens to report their income voluntarily and freely. However, this is not always the case given the increased adoption of tax avoidance and tax evasion strategies by taxpayers Murray, Throughout the years, tax avoidance and tax evasion are concepts that have constantly been used interchangeably though they are essentially different.
The major difference between tax avoidance and tax evasion is that the former is legal while the latter is illegal Murray, As a result, individuals or businesses get into trouble with the Internal Revenue Service IRS when they attempt to engage in deliberate tax evasion strategies or activities.
However, individuals or businesses can engage in strategies to avoid paying taxes through the help of a tax advisor without getting into trouble with IRS.
Tax avoidance can be described as actions undertaken by a taxpayer either an individual citizen or business to reduce tax liability and maximize income after taxation.
Based on regulations by the Internal Revenue Service, eligible taxpayers are permitted to claim income adjustments, credits, and deductions in order to lessen their total tax liability.
For instance, businesses can avoid taxes through establishing employee retirement plans or using other legal mechanisms to reduce their taxes. An example of a case that cite Gregory v. Helvering and demonstrates the legality of tax avoidance is The Sherwin Williams Company v.
The Supreme Court found that Sherwin-Williams was not motivated by tax avoidance when making payments to the two passive investment companies. On the contrary, tax evasion is an illegal activity that involves the use of various techniques or mechanisms for not paying taxes. Individual taxpayers or businesses engage in tax evasion through coming up with various ways not to pay their taxes.
While these individuals or businesses may carry out legal activities, they are liable for tax evasion if their motivation behind the legal activities is to fail paying the taxes they owe. According to Murraythe most commonly utilized techniques by individuals to evade paying taxes include failing to report income, failing to pay taxes owed, and reporting expenses that are not legally permitted.Under the federal law of the United States of America, tax evasion or tax fraud, is the purposeful illegal attempt of a taxpayer to evade assessment or payment of a tax imposed by Federal law.
Conviction of tax evasion may result in fines and imprisonment. This study is on ‘An Assessment of New tax reforms and their impacts on Tax evasion and tax avoidance, a case study of federal Inland Revenue Service (FIRS) Maiduguri.
Tax evasion is a problem that affects all of us in the long run. Tax evasion is defined in section of the Internal Revenue Tax Code. It is a Federal crime or offense for anyone to willfully attempt to evade or defeat the payment of federal income taxes.
Tax Evasion Example Case In , American entrepreneur Walter Anderson was arrested after the FBI discovered he was involved in the largest tax evasion case in United States history.
Anderson grew up in Maryland before beginning a career as a salesman at MCI Communications. The best way to avoid being charged with tax evasion is to know the tax laws for income taxes and employment taxes.
For example, knowing what deductions are legal and the record keeping requirements for deductions is a big factor in avoiding an audit. Corporate Tax Evasion Essay example; tax evasion. a case Words | 22 Pages.
A case on tax evasion by Anurag Kashyap Introduction Tax evasion is the illegal evasion of taxes by individuals, corporations and trusts. Tax evasion often entails taxpayers deliberately misrepresenting the true state of their affairs to the tax authorities to.