What is referred to as illegal non-payment of tax liabilities?

Tax evasion refers to the illegal act of not paying taxes that are owed, typically by underreporting income, inflating deductions, or hiding money and assets. This is a criminal offense and can lead to severe penalties, including fines and imprisonment. The key aspect of tax evasion is that it involves intentional actions taken to mislead tax authorities and evade tax obligations.

In contrast, tax avoidance is the legal practice of arranging finances to minimize tax liabilities through strategies that comply with tax laws, making it fundamentally different from tax evasion. Horizontal equity relates to the principle that individuals in similar financial situations should pay the same amount of tax, and simplicity refers to the ease of understanding and complying with tax obligations. These concepts, while important within the field of economics and taxation, do not pertain to the illegal non-payment of taxes.