The correct phrase that refers to the failure to pay legally due taxes is:
C. tax evasion
Tax evasion occurs when an individual or business intentionally avoids paying taxes that are legally owed. This can be done through various illegal means such as underreporting income, inflating deductions, or hiding money in offshore accounts to evade taxes. Tax evasion is considered a serious offense and is punishable by law.
In contrast:
- Tax avoidance (option A) is the legal act of minimizing tax liability by utilizing available deductions, credits, and exemptions within the framework of the law.
- Tax deferment (option B) refers to delaying the payment of taxes to a future date, often through legitimate means like retirement accounts or investment strategies.
- Tax exempt (option D) indicates income or entities that are not subject to taxation.
- Tax liability (option E) refers to the total amount of tax debt owed to the government.
