What are the differences between double tax avoidance and tax evasion?
Double tax avoidance and tax evasion are two crucial concepts in international tax law, particularly in Tennessee. Double tax avoidance is the legal process of reducing the amount of total tax that a person pays on income by allowing the person to claim a tax credit or deduction for taxes that were paid to another country or state. This process allows a taxpayer to avoid double taxation, in which the same income would be taxed multiple times. Tax evasion, on the other hand, is the illegal process of avoiding paying taxes by concealing income or assets, or misrepresenting information on a tax return. Tax evasion is a criminal offense in Tennessee and most other states, so anyone caught doing so must face criminal penalties. Some people use the terms “double tax avoidance” and “tax evasion” interchangeably. But it is important to note that the two are not the same. Double tax avoidance is legal, whereas tax evasion is against the law in Tennessee and other states. Additionally, double tax avoidance reduces the amount of taxes paid while tax evasion results in the taxpayer owing more taxes. It is important for people to understand the differences between double tax avoidance and tax evasion in order to ensure that they remain compliant with their tax obligations.
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