Tax avoidance is
A) Illegal when finding loopholes in the system
B) legal when finding loopholes in the system
C) legal and includes the informal economy
D) illegal and includes the informal economy

Question

Quizplus · Accepted Answer

Tax avoidance is the legal practice of minimizing tax liability through legal methods such as taking advantage of tax deductions, credits, and loopholes in the tax code. However, tax evasion, which involves the deliberate failure to pay taxes or understating income, is illegal. The informal economy refers to economic activity that is not reported to the government and is not taxed, so it is not considered tax avoidance or tax evasion.

Tax Avoidance Is