Failing to obey tax laws is the act of failing to file your tax returns or knowingly filing the wrong information to the tax authorities. Tax evasion as it is commonly known has severe consequences on the business owner and the business
The most common consequence for failing to comply with tax laws once the relevant authorities catch up with the offender is criminal consequences. Once tax evasion is noticed by the relevant authorities they assess the amount of money the offender has not paid the government, once the amount is determined the offender is then prosecuted in a court of law. The court of law then sentences the offender depending on the amount of money that the tax returns were not correctly filled. The court of law can fine the offender or order imprisonment.
Tax evasion can also lead to civil consequences. If a person knowingly fails to comply with the tax laws the tax authorities are allowed to look into the activities of the offending business for a certain period f time as prescribed by the law. Civil consequences include assessing the interests of taxes due for all the time for which they were outstanding. Depending on the magnitude of the offence the tax authorities can review tax records for over six years and any anomalies normally lead to further consequences. Unlike the criminal penalties that are limited to six years civil consequences are can accrue indefinitely.
The other obvious consequence is seizing of the properties by the government and closure of the business altogether. In many circumstances that are relate to the tax evasion once the authorities catch up with the offender the legal procedures that follow often mean the end of that business, this is so because with all the fines and imprisonment associated with tax evasion are verycostly to the owner for the business. Therefore, it usually spellsdoom for the company. Nonconsequentialist theory applied by the tax authorities is that all other businesses pay tax hence the offender must be brought to justice for that will be the ethical thing to do for the sake of justice. The ethical dilemma that is associated with prosecuting tax offenders is it morally right to bring more misery to a person that is already struggling financially. However, this is dilemma is overcome by the laws that govern the running of businesses.
The ethical implications that often accompany failure to comply with the tax laws include legal prosecution that often accompanies failure of following tax laws. They include fines that are imposed by the courts of law or imprisonment depending on the severity of the case. Other ethical issues associated with failure of tax compliance include the morality of prosecuting people who are already struggling financially by pilling more misery on them;. Other ethical issues are job losses to the people who might have been employed by the business that has been found violating tax laws.
Though Gus Rancatore can ethically argue that his failure to comply with tax laws was born from the fact that he was struggling financially, his reasoning is not an acceptable defense. When he was setting up the business he knew very well that the laws required that taxes be paid by all the operational; businesses, therefore if he could not meet the required standards he should not have set up the business in the first place. He uses the consequentialist theory of ethical egoism by acting in his own interest instead of acting in a way that satisfies all the relevant bodies.
The potential impact on Gus Rancatore is closure of his business, heavy fines and/or imprisonment. As for the tax authorities it means for revenue collection and bringing to justice the tax offenders.
References
Media, D. (n.d.). Penalties for Tax Evasion | Chron.com. Small Business - Chron.com. Retrieved
Tax Fraud and Tax Evasion Charges, Prosecutions and Penalties | Lawfirms.com. (n.d.). Find a
Lawyer. Learn the Law. Get Legal Advice.. Retrieved April 21, 2013, from http://www.lawfirms.com/resources/tax/tax-fraud-and-tax-evasion/tax-fraud-and-crimes.htm
