Examples of Tax Fraud and Evasion

Sales Tax Evasion
A New York City retailer offers to let a customer pay cash and provide a false out-of-state address to avoid paying the City's sales tax of 8.625%. He offers to ship an empty box to the customer's mother in another state as a precaution, so it looks as it the purchase is going out of state.

Business Income Tax Evasion
1. Your accountant "saves you money" by inflating your business expenses, such as your cost of goods, to lower your business tax liability. She also suggests that you lower your income by reporting only credit card sales, not cash transactions.

2. The owner of a company uses his corporate credit card to pay for family vacations, entertaining personal friends, and buying flowers for his wife. These "corporate" expenses are then deducted on the company's tax return, as well as not reported on the owner's personal income tax return as additional income.

Personal Income Tax Evasion
You attend a party at a friend's home, and one of the guests brags that, although he lives in Manhattan, he does not pay the City's Resident Personal Income Tax because he owns a summer home in the Hamptons that he uses as his tax filing address.