Question

Do you think the taxpayer is acting in manner of evasion or avoidance and why?

1. Taxpayer has both domestic and foreign income and for tax year 2018 decided to not declare or disclose the amounts of financial assets in offshore financial accounts.

2. Taxpayer is corporation or owns a corporation and for tax years 2015, 2016, 2017 engaged in profit shifting by moving earnings/revenue earned to low tax jurisdictions with lower tax rates than where the company was headquartered.

3. Taxpayer falsely claims eligibility for business mileage deduction of his/her personal vehicle on tax return for 2018.

4. Taxpayer researches for environmentally friendly tax credits and tax incentives and participates in buying land and building several windmills/wind power plants to generate a production tax credit on 2019 up coming tax return.

Answer 1

1. TAX EVASION

REASON:Taxpayer has both domestic and foreign income and for tax year 2018 decided not to declare or disclose amounts of financial assets in offshore financial accounts. It is the case of Tax Evasion as taxpayer is hiding his assets to avoid tax payment or reducing federal tax burden.

2. TAX EVASION

​​​​​​REASON:Taxpayer is corporation or owns a corporation and for tax years 2015, 2016, 2017 engaged in profit shifting by moving earnings/revenue earned to low tax jurisdictions with lower tax rates than where the company was headquartered. It is a case of Tax evasion as a taxpayer is trying to claim eligibility in false manner by shifting his profit/earnings to low tax jurisdictions with lower tax rate for not paying taxes he owed even the company is headquartered at other place.

3. TAX EVASION

REASON:Taxpayer falsely claims eligibility for business mileage deduction of his/her personal vehicle on tax return for 2018.It is the case of Tax Evasion as it is like tax fraud which is done by using ineligible or unearthed deduction.

4. TAX AVOIDANCE

REASON:

Taxpayer researches for environmentally friendly tax credits and tax incentives and participates in buying land and building several windmills/wind power plants to generate a production tax credit on 2019 up coming tax return. It is the case of Tax Avoidance as it is done before the paying tax liability and taxpayer is trying to generate legal tax credit which is ethical/reliable way of saving taxes.

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