Given this kind of sloppiness in dealing with two crucially important, but. quite different concepts, it is unfortunate that this sort of confusion reigns not only among average people, but even among otherwise knowledgeable lawyers.

Even the Internal Revenue Manual itself isn’t as helpful as it could, and should, be: “Avoidance of tax is not a criminal offense. All taxpayers have the right to reduce, avoid, or minimize their taxes by legitimate means. The distinction between avoidance and evasion is fine, yet definite. one who avoids tax does not conceal or misrepresent, but shapes and preplans events to reduce or eliminate tax liability~ then reports the transactions. Evasion, on the other hand, involves deceit, subterfuge, camouflage, concealment, some attempt to color or obscure events, or making things seem other than they are. Example: Mr. Maple purchased the stock on January 2d. Mr. Maple decided on December 3d of that year to sell the stock which would have resulted in a substantial recognized short-term capital gain. Upon realizing the benefits to be derived from the long-term capital gain provisions of I.R.C., Mr. Maple waited until February [of the next year] to sell the stock. This is an act of tax avoidance. If Mr. Maple did not realize the benefits which could be gained from the long-term capital gain treatment until after the stock was sold in December [of the first year], and he then altered the date on the purchase statement and reported the sale as a long-term capital gain with a purchase date of [a year earlier], his acts would be tax evasion.

Well, maybe that example from a court is helpful, but it’s not good enough. It’s not good enough because knowing the difference between avoidance and evasion is knowing the difference between legal and illegal conduct.