Question

Describe one penalty, standard, or ethical concern that an individual taxpayer or a tax professional should be aware of that you did not know previously. Remember to provide an example.

Answer 1

Answer: Paying tax is necessary and we all should pay income tax on time because Government gets revenue from the tax paid by us. Some people do not pay taxes or underpay tax, it is called Tax evasion. If people do not pay tax or pay less tax then they have to suffer the following penalties-

1. Upon conviction, the taxpayer is guilty, imprisonment for no more than 5 years and a fine of no more than $250000 for individuals and $500000 for corporations.
2. Willful failure to file a return, failure to pay estimated tax or failure to make a return, imprisonment for no more than 1 year and fine of not more than $100000 for individuals or $200000 for corporations.

Example: Ernst & Young was charged for tax avoidance in 2018 and agreed to pay $123 million to settle criminal tax avoidance charges stemming from $2 billion in unpaid taxes from 200 wealthy individuals.