Question: What is the difference between tax avoidance and tax evasion?
Answer: Tax avoidance is legal and tax evasion yields 3 to 5 years for each count.
Two weeks ago, the Tennessee Department of Revenue issued a press release entitled "Hendersonville Businessman Sentenced to 12 Years on Sales Tax Evasion Charges" (June 16, 2006).
The person sentenced was the president of a pizza restaurant who failed to report $546,202.47 in gross income and to pay $49,139.26 in sales tax that was collected from customers.
The State of Tennessee, as well as most other State and Federal taxing agencies, considers sales tax and employee payroll tax collected as their money. They consider the company who collects the sales tax to be a trustee for the taxes collected.
Taxing agencies have gotten very aggressive in legally pursuing small business owners who do not report and pay the taxes that have been collected.
My advice is to always report and pay taxes when they are due!
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