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Criminal, Family and Probate Law


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Tax evasion: Is it a state or federal offense?

On Behalf of | Jan 30, 2024 | Criminal Defense

You might be asking: Why would anyone pay taxes? The answer is simple: Taxes serve as revenue for the federal and state governments, funding for public services such as the maintenance of highways, the police, welfare programs and other social services. It’s a crime to attempt to evade or defeat taxes.

But is tax evasion a state or federal crime?

Arkansas considers tax evasion a serious offense, but the crime is also punishable under federal law. While tax evasion can be prosecuted at the state level, most cases are federal due to the involvement of the Internal Revenue Service (IRS), a federal agency.

This blog will examine tax evasion both as a state and federal offense. It will also identify which actions constitute tax evasion.

Tax evasion as a state offense

According to Arkansas law, any taxpayer who willfully attempts to evade or defeat the payment of any tax, penalty or interest due under any state tax commits tax evasion. It’s also against the law for any person to assist a taxpayer in evading taxes.

Tax evasion in Arkansas is a Class C felony, punishable by up to ten years in prison and $10,000 in fines.

Tax evasion as a federal offense

Similarly, the U.S. Code defines tax evasion as an offense where the person willfully attempts to evade or defeat any tax imposed on them. Under federal law, the offense is a felony that leads to up to five years of imprisonment and up to $100,000 in fines ($500,000 for corporations) on conviction.

What counts as tax evasion?

Tax evasion can come in many forms. The following constitute tax evasion:

  • Underreporting income
  • Inflating deductions or expenses
  • Hiding money or assets in unreported accounts
  • Using false documents to deceive tax authorities

Additionally, individual persons aren’t the only ones who can face charges, as even corporations and organizations can face tax evasion allegations.

Tax evasion is a serious crime that Arkansas and the IRS actively pursue. Those accused of the offense may even have to deal with charges on both the state and federal levels. Because of the complexity of such cases and the severe penalties that await, anyone accused of the offense should consider working with a legal professional knowledgeable in white-collar crime.