Just to put everyone on an equal footing when discussing the charges being brought against Manafort and others:
http://www.tax-whistleblower.com/tax-fraud/
"What is Tax Fraud?
Before you can consider reporting tax fraud, it helps to understand what it is. Tax fraud is a general term which can trigger many different laws found in Title 26 (the Internal Revenue Code) and Title 18 of the United States Code (or “USC”). The core distinguishing feature of tax fraud is a taxpayer’s intent to defraud the government by not paying taxes that he knows are lawfully due. Tax fraud can be punishable by both civil (i.e. money) and criminal (i.e. jail time and money) penalties, with the civil violations primarily in Title 26 and the criminal violations principally in Title 18, respectively, of the USC. For example, a taxpayer can commit tax fraud and be punished with civil penalties under 26 USC § 6663, without being charged with criminal tax evasion.
Tax fraud as a general matter is very difficult for the government to prove because they have the burden to show the court that the taxpayer has intentionally defrauded the government out of tax revenue. Proving that a taxpayer knowingly violated the highly complicated Internal Revenue Code is a very difficult task, so the government often chooses to pursue the taxpayer civilly for simply underpaying tax, which does not require proving that the taxpayer intentionally underpaid their taxes. As a practical matter, if the taxpayer has any reasonable legal argument for why they did not pay the tax due they will usually beat a criminal charge.
What is the difference between Tax Fraud and Tax Evasion?
Tax evasion is a subset of tax fraud. "Tax evasion" is typically used in the criminal context, as in someone who is charged with the crime of tax evasion in violation of 26 USC § 7201. Tax evasion usually entails a deliberate act of misrepresentation of taxable income to the IRS. Common examples of acts which could result in a charge of tax evasion are: not declaring all your income, deliberately overstating expenses or deductions, or failing to file tax returns when you have taxable income in an attempt to avoid detection."
As you can see the burden of proof is on the government. It's not something a review of filed tax returns would normally show because the taxpayer prepares the return and has the records used to prepare the return. An audit of that return and the records supplied by the taxpayer supporting its preparation would probably not show'unreported income'. The unrecorded income is intentionally hidden from the government - that's the fraud/evasion. Even tax audits are usually limited in their scope to what was reported by the taxpayer. Uncovering unreported income has to be done through other discovery methods.
People that don't report income do it for a reason, fraud.
http://www.tax-whistleblower.com/tax-fraud/
"What is Tax Fraud?
Before you can consider reporting tax fraud, it helps to understand what it is. Tax fraud is a general term which can trigger many different laws found in Title 26 (the Internal Revenue Code) and Title 18 of the United States Code (or “USC”). The core distinguishing feature of tax fraud is a taxpayer’s intent to defraud the government by not paying taxes that he knows are lawfully due. Tax fraud can be punishable by both civil (i.e. money) and criminal (i.e. jail time and money) penalties, with the civil violations primarily in Title 26 and the criminal violations principally in Title 18, respectively, of the USC. For example, a taxpayer can commit tax fraud and be punished with civil penalties under 26 USC § 6663, without being charged with criminal tax evasion.
Tax fraud as a general matter is very difficult for the government to prove because they have the burden to show the court that the taxpayer has intentionally defrauded the government out of tax revenue. Proving that a taxpayer knowingly violated the highly complicated Internal Revenue Code is a very difficult task, so the government often chooses to pursue the taxpayer civilly for simply underpaying tax, which does not require proving that the taxpayer intentionally underpaid their taxes. As a practical matter, if the taxpayer has any reasonable legal argument for why they did not pay the tax due they will usually beat a criminal charge.
What is the difference between Tax Fraud and Tax Evasion?
Tax evasion is a subset of tax fraud. "Tax evasion" is typically used in the criminal context, as in someone who is charged with the crime of tax evasion in violation of 26 USC § 7201. Tax evasion usually entails a deliberate act of misrepresentation of taxable income to the IRS. Common examples of acts which could result in a charge of tax evasion are: not declaring all your income, deliberately overstating expenses or deductions, or failing to file tax returns when you have taxable income in an attempt to avoid detection."
As you can see the burden of proof is on the government. It's not something a review of filed tax returns would normally show because the taxpayer prepares the return and has the records used to prepare the return. An audit of that return and the records supplied by the taxpayer supporting its preparation would probably not show'unreported income'. The unrecorded income is intentionally hidden from the government - that's the fraud/evasion. Even tax audits are usually limited in their scope to what was reported by the taxpayer. Uncovering unreported income has to be done through other discovery methods.
People that don't report income do it for a reason, fraud.
