Updated: Mar 1, 2021
A taxpayer has the fundamental right to minimize taxes. As stated by Judge Learned Hand:
... nobody owes any public duty to pay more than the law demands, 159 F2d 848, 851.
... Anyone may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes. 69 F2d 809, 810, affd 293 U.S. 465.
... [The] legal right of a taxpayer to decrease the amount of what otherwise would
be his taxes, or altogether to avoid them, by means which the law permits, cannot be
doubted. 293 U.S. 465, 469.
There is a clear distinction between (1) minimization of taxes and (2) fraud. This difference is stated in the IRS Handbook for Special Agents, section 312:
... Any attempt to reduce, avoid,
minimize or alleviate taxes by legitimate
means is permissible ... One who avoids
tax does not conceal or misrepresent. He
shapes events to reduce or eliminate tax
liability ... Evasion on the other hand
involves deceit, subterfuge, camouflage,
concealment, some attempt to color or
obscure events, or making things seem
other than they are .... (emphasis added).
There is no statute of limitations for a false or fraudulent return with intent to evade tax, a
willful attempt to evade tax, or failure to file a return. The IRS may assess and collect the tax at any time for a fraudulent return, 26 USC §6501.