According to the Internal Revenue Manual, it is not criminal to reduce, avoid, or minimize personal income taxes by legitimate means. In other words, avoidance is acceptable, but evasion is not. When you avoid taxes, you do not conceal, misrepresent, or make things appear as they aren't. Making a mistake is not criminal either. It all boils down to whether you intentionally do something fraudulent. If the IRS determines that your behavior was criminal, you may find yourself paying a fine or, in the worse case, spending time in jail. If you are being investigated for a tax crime by the IRS, it is very important to retain an attorney who is familiar with both tax and criminal matters.

Although the following list is not all-inclusive, it gives a number of common examples of taxpayer behavior that the IRS considers intentionally fraudulent or criminal:

• Deliberately underreporting income.

• Taking payments in cash and failing to deposit them in order to avoid tax consequences.

• Inflating the value of business expenses.

• Creating false business expenses for tax purposes.

• Using a false social security number.

• Keeping two sets of financial records for your business.

• Claiming an exemption for a spouse when you are single.

• Claiming an exemption for a dependent whom you never supported.

• Destroying your books to conceal tax evasion.

• Creating false checks or receipts to support deductions that don't exist.

• Denying that deposits in your accounts are income when they are.

• Concealing financial accounts from the IRS.

• Transferring assets to conceal them from the IRS.

• Reporting personal expenses as business expenses.

• Claiming more charitable deductions than were made.

• Failing to file returns even if you make a substantial amount of income.

• Making false statements to the IRS under oath.

• Failing to file returns despite having been contacted in prior years by the IRS for failing to file.