Monday, May 27, 2013

Tax Avoidance vs. Tax Evasion

The New York Times:

No taxpayer is obliged to pay the government a penny more than the law requires, the Supreme Court said in 1935. But the court also said no corporation was permitted to use “elaborate and devious” means—known nowadays as “gimmicks”—for the express purpose of evading taxes. That ancient tension between legal tax avoidance and illegal tax evasion, and between a corporation’s self-interest and the fundamental requirements of a government and its citizens, remains at the heart of the American system.

Or, more memorably, Avery Tolar to Mitch McDeere in John Grisham's Class Action:

The difference between tax avoidance and tax evasion is:

a. whatever the IRS says
b. a smart lawyer
c. 10 years in prison
d. all the above