Some years ago, Time magazine reported that “tax evasion is becoming an epidemic...,” piously characterizing the phenomenon as “a moral problem, a symptom of the weakened sense of dues owed to country and society....” There’s always a lot of that kind of talk around, in and out of the media.

But missing from the discussion has been any serious effort to explain to the layperson what tax fraud and tax evasion really are.

And that’s unfortunate, because given the complexity of today’s tax laws enforced by a recently chastened, but nonetheless still militant I.R.S. it’s downright dangerous for any taxpayer not to know at least the basics of tax fraud and tax evasion. Criminal tax evasion, for example, is a serious and expensive federal felony. Yet few people know much about it. So, in the name of self-defense, let’s clear away the fog.

Section 6653(b) of the Internal Revenue Code imposes substantial civil penalties for underpayment of tax if theres fraud.

Section 7201 of the Code imposes criminal penalties on “[a]ny person who willfully attempts in any manner to evade or defeat any tax.”

Although neither of these key concepts “fraud” or evasion” are anywhere defined in the Internal Revenue Code, the law considers them the same: in practice, civil “fraud” amounts to criminal “evasion,” and vice versa. But that s only the beginning. Fraud and evasion may be the same, but what are they?

First, remember that for the government to make a fraud/evasion case stick, there must be a tax deficiency. There must be some additional tax owed, arising either from overstated deductions being disallowed, or from allegedly understated (or unreported) income. More