Tax evasion

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Tax evasion is the avoidance of paying government taxes by failing to report, or fraudulently reporting, income earned and subject to tax.

An example would be the sale of real estate whereupon the seller agrees upon a price, but structures the sales documents to report a lower sales price (with the rest paid "under the table" in cash), in order to minimize or avoid any gain, and thus any tax. (The buyer would also participate in a form of tax evasion, in that the legally reported price would now be the basis for future property tax assessment, thus illegally lowering owed property tax.)

It differs from tax avoidance (which is the use of tax laws to legally minimize, or avoid altogether, any taxable income), though in some cases the difference rests upon legal interpretation.

See also