What Is the Difference Between Money Laundering and Tax Evasion?
Money laundering and tax evasion are extremely serious white-collar crimes that could put you behind bars for a long time if you’re ever found guilty. You should look into hiring a money laundering lawyer or an attorney with experience handling tax fraud cases if you’re currently facing charges.
However, you should also understand the differences between money laundering and tax evasion. Learn about them below.
What Is Money Laundering?
Money laundering is an illegal activity designed to make any proceeds earned by committing crimes appear legitimate. Those who participate in money laundering aim to make “dirty” money look “clean.” If accused of wrongdoing, they must enlist the services of a money laundering lawyer.
To launder this money, criminals take these three steps:
- Placement: They begin by introducing the money into the U.S. financial system, often by breaking it into smaller deposits or investing it in various ways.
- Layering: They move this money around numerous times to distance themselves from the illegal source of the funds they’re trying to “clean.”
- Integration: They welcome this money back into their financial accounts in ways that make it look more legitimate.
In some cases, money launderers will simply try to “clean” their money. They might visit a casino and use “dirty” cash to buy chips before gambling for a short time and then cashing their chips back in for a “clean” check or bank transfer.
In other instances, money launderers will attempt to hide their illegal actions by complicating things. They may, for example, set up shell corporations and use them exclusively to manipulate the financial system. They may even establish international shell corporations to complicate things further and deceive law enforcement.
If you’re ever accused of money laundering, the circumstances surrounding your case will usually be complex. An experienced money laundering lawyer will work to detangle them and make sense of the situation.
What Is Tax Evasion?
Tax evasion is an illegal activity committed by those who owe taxes to the Internal Revenue Service yet avoid paying them. Tax evaders make it their mission to minimize their tax obligations as much as possible.
Tax evasion is carried out in a few different ways. Those engaging in it will typically take one or more of these steps:
- Underreporting income
- Exaggerating expenses
- Claiming false deductions
Tax avoidance is committed by individuals and businesses alike. Individuals might file what amount to fake tax returns because of the false information included in them, while business owners might engage in tax evasion by filing false payroll records.
Either way, the IRS does not look favorably upon those whose goal is to avoid paying their fair share of taxes. The agency has the power to refer suspicious cases to those capable of carrying out criminal tax investigations.
The agency has also cracked down on scammers who file taxes under different fake names to collect tax returns they aren’t entitled to. It’s another form of tax fraud that has recently become increasingly common in the U.S.
Need To Hire a Money Laundering Lawyer? Give Our Law Firm a Call Today
Even though money laundering and tax evasion share some similarities, many differences set them apart. Make sure you work with an attorney who understands the complexities of money laundering if you’re ever charged with this white-collar crime. They will examine every aspect of your case and explain your legal options.
Michael White, P.A., is the money laundering lawyer you should count on to handle your case. Reach out to us at (954)-270-0769 today to schedule a free consultation and discuss your case with a seasoned money laundering attorney.
