> Tax avoidance is an illegal means of not paying the actual tax required
It seems curious that you'd start by defining terms and then define those terms incorrectly.
tax a·void·ance
taks əˈvoidns
noun
the arrangement of one's financial affairs to minimize tax
liability within the law.
In short, what you're referring to as minimisation is avoidance. For what it's worth, I've been using them interchangeably up to this point, and I agree that it's innocuous, harmless, etc.
The illegal act you're referring to is tax evasion.
> the taxing organisation has internal descriptions of what they will allow as legitimate deductions which are different to what the legislation might read
In America, the IRS is bound to the same laws as the citizenry, and while there may be some allowed discretion in interpretation, re-interpreting the law on their own is in fact illegal.
Tax avoidance is the avoidance of the required tax (an alternative name is tax evasion), tax minimisation is paying one's required tax and no more.
From the perspective of tax collectors, avoidance is evasion and not minimisation. Politicians also use the term "tax avoidance" as a synonym for "tax evasion" when it is useful to them.
Having friends who worked at various stages for various kinds of bureaucracies (including tax collection), they have spoken of the distinct terminology used and why it is used.
It is not a matter of re-interpreting the "tax law" but creating the appropriate internal definitions as to what that "tax law" means. The problem that people face is that legal definitions quite often do not match the general populous understanding of the words used.
We can always argue over whether or not "tax avoidance" is the same as "tax evasion" or "tax minimisation". The reality is that each of these terms has a definitive meaning dependent on who is using the term. Taxation collection organisations will have one set of meanings, politicians will have another, the general population will have another.
The only meanings that are relevant are what the taxation collection organisations assign to those terms in their internal working processes. I am using the definitions of those terms as shared to me by my friends in taxation.
One of the reasons for using tax accountants these days is that many years ago, I was audited by the relevant tax authority. The upshot was that they disallowed the claim in question and in my last conversation with the auditor, he made the comment that the deduction was allowable but he wasn't going to tell me how to claim it. I have used accountants since then. I let them deal with the complexity of the taxation law. A good accountant is worth the cost just to avoid having to deal with the "insanity" of current taxation regimes.
I don't have a problem with taxation per se, only with the insane level of complexity that has built up in modern times. When tax law goes from say 80 pages at the start to 30,000 + pages today, one has to ask why? YMMV.
Lastly, if in America, the IRS is bound by those same laws as the citizenry, why are the so many documented cases of the IRS "draining" the bank accounts of so many little people when nothing illegal has been done? The IRS has interpreted the law by their own internal definitions.
> Tax avoidance is the legal usage of the tax regime in a single territory to one's own advantage to reduce the amount of tax that is payable by means that are within the law.
> Tax avoidance is the use of legal methods to modify an individual's financial situation to lower the amount of income tax owed. This is generally accomplished by claiming the permissible deductions and credits. This practice differs from tax evasion, which uses illegal methods, such as underreporting income to avoid paying taxes.
> The process whereby an individual plans his or her finances so as to apply all exemptions and deductions provided by tax laws to reduce taxable income.
> Through tax avoidance, an individual takes advantage of all legal opportunities to minimize his or her state or federal Income Tax, gift tax, or estate tax. An individual may, for example, avoid federal income tax by investing a large sum of money in municipal bonds, since the interest on such bonds is not considered taxable income on which federal tax is due. Interest on the same amount of money placed in a savings account must be included as taxable income.
> From the perspective of tax collectors, avoidance is evasion and not minimisation.
This is misleading. Either may trigger an audit if the internally expected discrepancy is greater than the actual discrepancy, but an audit isn't criminal, and it takes an assertion of fraud (a violation of the law, which does not fall within legal avoidance strategies) to go from audit to criminality.
> Politicians also use the term "tax avoidance" as a synonym for "tax evasion" when it is useful to them.
Possibly. Politicians do all sorts of stupid shit. That has zero bearing on the definition of words.
> The problem that people face is that legal definitions quite often do not match the general populous understanding of the words used.
Right, which is why tax agencies interpret the law into tax code that is distributed to the populace* as clear and transparent. In the event that there's a failure at reconciliation between legislative intent on a tax policy and the interpreted code, that can be changed legislatively, clarified during reconciliation, or fixed through a variety of other means. The IRS is not authorized to re-interpret tax law to mean things it doesn't say, and while there's a certain amount of interpretive leeway, as a citizen, you can sue where you disagree.
> We can always argue over whether or not "tax avoidance" is the same as "tax evasion" or "tax minimisation".
We can, but since there are clear lexical, legal and tax definitions for each, it seems a stupid hill to die on. If people insist on using the wrong words, that can't be helped, but that doesn't mean that the right words don't exist.
> I am using the definitions of those terms as shared to me by my friends in taxation.
Not that it should be considered canon, but I have friends that work at the IRS, the SEC, and at FINCEN. I reached out to them, and they all think that your friends are wrong. /shrug.
It's probably worth clarifying that when I refer to agencies here, I'm referring specifically to American agencies. I don't have any clue on how other countries internally represent their laws, and I make no assertions as to how they operate. I have no idea.
> Lastly, if in America, the IRS is bound by those same laws as the citizenry, why are the so many documented cases of the IRS "draining" the bank accounts of so many little people when nothing illegal has been done? The IRS has interpreted the law by their own internal definitions.
Well, they can't drain your account, but they can freeze your funds. As to the 'why', it's because there are laws that expressly authorize them to do so. The IRS has express legal authority to issue a bank levy to freeze accounts in the event of certain activities or suspicion of certain activities. Note that 'having legal authority' to do something does not connote to 'having extralegal authority' to do something. They are bound by the same laws that you and I are, and those laws authorize them to do something. While speaking practically, they might be able to freeze accounts for no reason at all, but they are breaking the law in doing so because they do not have legal authority to freeze accounts for funsies.
As far as any tax collection body is concerned, tax avoidance bad (acts as if it is the same as tax evasion), tax minimisation okay.
As far as IRS and draining of accounts is concerned, tell that to the poor people who have had their money confiscated from their accounts. Enough records of this occurring for you to track down. Little people usually don't have the resources to engage in the legal battles to regain their funds.
As far as your friends are concerned, their MMV.
Our differences are there and so be it. There are more important matters occurring at this time than this kind of discussion.
It seems curious that you'd start by defining terms and then define those terms incorrectly.
In short, what you're referring to as minimisation is avoidance. For what it's worth, I've been using them interchangeably up to this point, and I agree that it's innocuous, harmless, etc.The illegal act you're referring to is tax evasion.
> the taxing organisation has internal descriptions of what they will allow as legitimate deductions which are different to what the legislation might read
In America, the IRS is bound to the same laws as the citizenry, and while there may be some allowed discretion in interpretation, re-interpreting the law on their own is in fact illegal.